A mortgage is a loan that uses a parcel of real estate as collateral. A mortgage loan rate is the interest rate charged on a mortgage. Mortgages are classified into two types: residential mortgages and commercial mortgages. In case of a residential mortgage, the self-occupied residential property of a borrower is then provided as collateral.
A commercial mortgage is a loan in which a real estate occupied by a borrower other than a residential property is provided as collateral to secure payment of the principal and interest, or just the interest. In the case of commercial mortgages, the collateral is usually a commercial building, an office, a store or other business real estate.
Commercial mortgages are typically made by businesses that need the money for working capital, purchasing new equipment, or expansion. Since a business may be formulated as a partnership, corporation, or a limited liability firm, the business' assessment of creditworthiness by a financial institution is relatively more complex.
Mortgage loan rates for a residential mortgage differ from the rates for a commercial mortgage as the rates are usually higher in the case of a commercial mortgage. This is because the risk associated with residential mortgages and the percentage of defaults is actually lower compared to commercial mortgages.
Mortgages can be classified as fixed rate or adjustable rate mortgages. Both of these mortgages may be obtained for residential and commercial properties. The initial interest rate of an adjustable rate is actually lower compared to the fixed rate mortgage.
The Federal Reserve Board primarily governs mortgage loan rates and if the board changes the interest rates, the mortgage lenders should then adjust their interest rates accordingly. They are also influenced by economic and market factors such as inflation.
Generally, lower rates can be availed if you pay a 20% down payment or more of the loan amount. On the other hand, if you pay a down payment of 5% or less of the loan amount, you may only have to qualify for a higher interest loan.
Generally, mortgage loan rates fall between 5% and 13%. Long term loans have slightly higher interest rates than the short-term ones, and the difference is usually below 1%. Loan rates may also differ with mortgage loan types like home equity loans, FHA loans, VA loans, commercial loans, home improvement loans, and bad credit/sub prime mortgage loans.
Mortgage Loan Rates
What Can Affect Your Mortgage Rate
One primary factor of mortgage rate movement is inflation. Inflation is a growing economy and increasing prices of goods and services. A growing economy means a higher demand for goods and services, allowing producers to increase their prices. This increase in prices therefore results in higher real-estate prices, higher apartment rents, and higher mortgage rates.
The Federal Reserve attempts to reduce inflation and slow down economy by decreasing interest rates. In the process, mortgage rates are lowered. Although mortgage rates have the propensity to fluctuate in the same direction as interest rates, their actual movements may also be based upon mortgage supply and demand.
Compared to interest rates, mortgage rates have a slightly different equation in their supply and demand. This difference explains why mortgage rates tend to move differently from other rates. For example, lenders may be committed to close additional mortgages. In doing so, they will have to decrease the mortgage rates even when interest rates are going up.
Additional Factors Affecting Mortgage Rates
Mortgage rates are influenced by several other factors besides inflation. Mortgage rates tend to increase when the amount of the loan increases. This expansion in mortgage rates is especially true if the loan amount exceeds the established loan limits of Fannie Mae and Freddie Mac. Loan limits typically change at the beginning with each year to conform with the trend mortgage rates have established.
The duration of the loan may also affect mortgage rates. Shorter loans usually equate to lower mortgage rates and longer loans can cost you higher mortgage rates. Loans with a 20-year or 15-year note can let you to save thousands of dollars on mortgage rate payments. However, this shorter time period also means that your mortgage rate payments every month will also be much higher.
It's possible to avoid these high payments with an adjustable mortgage rate. This plan can allow you to start out with a lower mortgage rate, but your monthly mortgage payment will increase if the current interest rates go up. Fixed mortgage rates are typically higher than adjustable rates, but they provide the opportunity to save money as interest and mortgage rates increase.
A higher down payment can help you to save on your monthly mortgage rate payments. By making a down payment of at least twenty percent, you can get the best possible mortgage rate. If your down payment is smaller you'll have less equity in the property. Less equity means less collateral, so your mortgage rate will be higher.
Discount points can also affect mortgage rates. A lower mortgage rate generally means higher points paid on your loan. This same rule applies for lender fees such as closing costs. Higher closing costs paid to the lender will result in lower mortgage rates. If you choose not to pay for all the closing costs up front, the lender will increase your mortgage rate to accommodate the additional fees.
This concept of raising and lower mortgage rates is relatively simple. Your lender should be willing to lower your mortgage rate, so long as more money is paid up front. With more money down, you'll pay a lower mortgage rate. If, on the other hand, you put less money down, you'll pay a higher mortgage rate.
Pre-foreclosure properties via short sale
I've done a few pre-foreclosure properties via short sale in the past representing the buyer and seller.
I've talked to a few people in the past about this, but I’m having a hard time finding some way to get Default notices prior to the newspaper (Which is always pretty bad). I know there's a few websites that do the whole pay-for-listings thing and the like. Are these services the best/only way to get information like this?
Also, what about loss mitigation? I know it's not talked about too much, but met someone who was doing quite well, i know there's alot of companies that offer "Training" But i was curious to know if it was just like the BPO certification companies, a few hundred dollars to have a title and nothing else. One of the agents in my office is with Titanium Solutions, and she's had one LM order since paying the fee, and got one listing since then (She represented the buyer on a property that was headed to foreclosure, the owner didn't know how to sell it even though he had a FSBO sign in the yard). I just signed up with Titanium about a week ago they have already sent me 4 loss mitigation cases. I am not sure if I like it or not yet. It's very time consuming and hard to get a hold of the homeowners. They want you to contact them after 5pm or on weekends (in person)which is hard for me with a 14 month old. I think I am going to change my service area to just the city I live and work in. It's not like BPOs where you can do a 30 mile radius, it takes to much time. Anyways, I figured I would try it out for a few months and see how it goes. I really like the concept of the company and I am hoping that if I get a listing that does go to foreclosure it will give me a better chance at getting the listing from the bank. If anyone else has any experience with them I would love to hear about it. Bankruptcy is a very complex subject. Most attorneys never mention the fact that only a few percent out of all cases file end up completing there repayment plans. The rest default and get dismissed and the house forecloses anyways.
Let me give you this example scenario A:
Homeowner mortgage payment 1,500 a month.
They file bankruptcy to stop the foreclosure they have 7,000 in arrearages with late payments, penalties, and interest. There 3 year repayment plan with the trustee fees and attorney fees is 300 a month.
How in the he&* are they now going to pay 1,500 and 300 when they couldn't even pay 1,500 for months?
You don't pay the trustee the bankruptcy payment they file a motion to dismiss, if you don't pay your regular mortgage each month the lender petitions the court for a relief of the automatic stay.
Either way if they don't pay both there screwed. Good luck on getting a short sale approved while in bankruptcy. The trustee usually won't let them sell for a loss because the trustee is trying to get the most money for the creditors.
This is a killer especially if I am an investor buying the property. The seller has agreed to sell to me for 140k when the house is worth 190k but then before it closes the seller filed for bankruptcy, guess what the trustee disallows the sale saying the price of the contract is too low and they can get more doing a bankruptcy sale to satisfy the creditors.
Most people that file bankruptcy ARE not motivated to do anything. They are actually relieved that all collection activity
including foreclosure has stopped and now is not the time to contact them. When there case is getting dismissed is when to contact them. I get them before the lender refills the foreclosure process and get a 1 to 2 month jump on everyone else.
No I won't post the process for that on this board.
As soon as there case is dismissed or the automatic stay is lifted for the lender you can pursue the short sale and no longer need court approval.
All I do is pre-foreclosures and I also tell people about bankruptcy. Attorneys want money at all costs.
Are You Facing Foreclosure?
If you are facing foreclosure you need to price it for a fast sell.If it is in good shape marke tit to regular homebuyers,if it is in need of repair or bad shape marke it to investors.
If you can't reduce the asking price you will need to pursue a short sale before you get foreclosed on as it's easy to see your house is overpriced.Even with mo marketing if the price was decent and just in the mls you would have had more showings then that.If the house needs to much work you would have had at least more showings but just no or low offers.
Short sales are easier to do if your loan is VA or FHA.Executed correctly a short sale shows settled on your credit report which is way better than a foreclosure by miles,no promissory note is signed by the seller,and no defeciency judgment is pursued by the lender.You might get a 1099C for forgiven debt but it will be easy to show you were "insolvent" when the lender agreed to short sale your mortgage.You just need to file IRS Form 982:"Reduction of Tax Attributes Due To Discharge of Indebtedness" to avoid paying federal and state income taxes.
If the lender will not agree to a short sale you can voluntarily do a deed-in-liue of foreclosure where you sign the deed over to the bank.This is often better on your credit report and at the same time you can negotiate cash for keys with the lender to help with your move to more affordable housing.
You can do short sales on conventional loans but they are harder to do as mortgage companies and servicers are forced to try short sales as a workout option because of FHA and VA rules.
If you have leins other than th emortgage they will not do a deed-in-liue beause it will be cheaper for the lender to foreclose and wipe out any junior liens.If the second mortgage is foreclosing andnot the first which is not as common you can see if you could do a deed-in-liue to the second.
What You Can Do
Repossession is a very stressful event. There is many reasons for this event. Many people don’t know about the process involved.
Reason For Repossession: If you miss the payment of your mortgage or any loan secured, your property could be repossessed, if you do not act quickly.Generally would wait for two payments to be missed before taking any action.
Repossession proceeding can occur because your loan provider has power to take back the control and sell it. This is the last action of lender and before this you would have many opportunities to prevent it.
1-Lender will contact you to inform for missed payment.What You Can Do: There is need of conversation between lender and you and try to reach an agreement so that you can make
additionally monthly payment off for a certain period.
2-Lender solicitors will contact you directly. They will inform you that any more missed payment could result in repossession of your property.
What You Can Do: Try to reach on an agreement. Talk to solicitors and follow the same process as above. Negotiate with them to agree acceptable terms for them and affordable term for you.
3-After 4-6 month, lender solicitors will issue repossession proceeding with country court.
What You Can Do:
(i) Complete and return court summons.
(ii) Complete the reply form received from court.
(iii) Give Your income detail as much as you can to show that you are enough capable to pay current monthly installment.
(iv) If you feel that you can make full mortgage payment plus additional contribution each month then present your proposal in front of lender.
How To Keep The Home:
1) You should clear that you are able to pay monthly mortgage payment. if you are fail then you can get eviction notice via court without further hearing.
2) Pay off all your monthly mortgage payment by borrowing fund from relative or friend.
3) Borrow money from another lender but this could be dangerous in future. Interest Rate could be high of another lender so think twice before taking this decision.
4) Remortgage: If you have sufficient equity then you can go for it.
Sufficient Equity: If the value of your property is greater then debt secured then Lender will offer you a percentage of property value.Make sure that you can afford Remortgage at higher interest rate.
5)Sell Your Property:
(i) Sell Your Property By Estate Agent: Typically they will charge 2%-3% of the property value +VAT. Decorate your house for getting the best price.
(ii) Private Sale: Private sale is much cheaper way to sell your home. Internet is most common medium for this type of selling. Buyer will come directly to you. You are free for negotiation on price of property.Major drawback of this method is very few viewing of your property.
6)Fast Cash Buyers:
(i) Pay 80-90% of market value.
(ii) There are no fees of estate agent to pay.
(iii) Guaranteed sale
(iv) Downside: you will get less than market value.Advice about this way:
(i) Never pay anybody for a valuation of your property.
(ii) Never Pay any Fees.
(iii) Check they have fund available.
(iv) Check their process deeply.
Mortgage Foreclosure Loan Versus a Quick Sale Plan
In considering the goal to stop repossession of your home, there actually are a number of viable options that are available to you and your family:
You can obtain a mortgage foreclosure loan as a means of working to stop repossession of your home.
You can retain the professional services of a company like Advanproperty through which you can obtain a quick sale (and lease back if you desire) of your home.
The primary beneficial aspect of a mortgage foreclosure loan is found in the fact that you can get fairly quick relief if you do qualify for this type of financing. In what does amount of a fairly reasonable amount of time you can have the funds necessary to stop repossession of your home.
On the downside, you must understand that eventually the interest rate associated with a mortgage foreclosure loan is going to be higher than what you had been paying on your initial home mortgage loan. While there will be a period of abatement in which you do not have to make payments, normally such a term lasts for only a few months. In the end, you will spend more money on a mortgage foreclosure loan that you would have spent on the initial home loan. In short, you may have taken a step to stop repossession but you may not have found a permanent solution.
On the other hand, with a quick sale plan from a company such as Advanproperty, you are able to stop repossession of your home in its tracks. Moreover, if you and your family desire to stay in residence – and most people do – you can arrange for a lease back of your home at a remarkably reasonable rate. In short, with a quick sale plan you have an immediate resolution of the repossession and you have a long term plan that will work for your family financially and personally into the future.
Lesser No Of Homes Have Been Repossessed In Comparison To No Of Court Matters