Many professional mortgage services organizations help process mortgages and loans for fixed rates, process first time home loans, variable rate mortgages, and land loans as well as assist in debt reorganization. Debt reorganization, or debt restructuring, is an arrangement involving both the creditor and the debtor that change the original terms for servicing an existing debt. Debt reorganization usually involves relief for the debtor from the existing terms and conditions of a debt obligation. This may be in response to liquidity issues, such as when the debtor does not have the cash needed to meet upcoming payments.
There are four main types of debt reorganization:
1. Debt forgiveness: a reduction or complete suspension of a debt obligation by the creditor via a contractual arrangement with the debtor.
2. Debt rescheduling or refinancing: a change in the terms and conditions of the amount owed. The change may result in a reduction in present value terms.
3. Debt conversion, debt-for-real estate swaps, debt-for-development swaps, debt-for-nature swaps, and debt prepayment: the creditor exports the debt claim for something of economic value on the same debtor.
4. Debt assumption: when a third party is also involved.
A debt reorganization package may involve more than one of the types mentioned above. For example, most debt reorganization packages that include debt forgiveness also result in a rescheduling of other outstanding debt. Debt refinancing transactions also include a balance of payment portion that is similar to debt rescheduling in that the debt being refinanced is extinguished and replaced with a new financial instrument or instruments.
Chapter 13 Bankruptcy is referred to as debt reorganization or debt consolidation. It is designed to stop a foreclosure on a home allowing for a homeowner to catch up on back payments usually over the course of sixty months. Chapter 13 can also be used to pay off an automobile, lower credit card payments, and pay back debt with no interest or penalties. Homeowners who have filed Chapter 13 in order to stop a foreclosure are still eligible to refinance their home. After filing for Chapter 13 and stopping foreclosure, the homeowner will often enter a credit repair program and refinance their home after the having made 12 consecutive, on-time payments in the Chapter 13 Bankruptcy. A Chapter 13 Bankruptcy holds on a credit report for seven years.
Debt reorganization is usually companies a banking filing, but not always. A reorganization proposal can be agreed upon by the creditors, with agreements in writing so that all parties know their rights and obligations. All attorneys and accountants involved should make every effort to have the agreement satisfied the requirements of a disclosure statement under the Bankruptcy Code in the event Chapter 13 Bankruptcy is filed. This is often referred to as a prepackaged bankruptcy.
When a homeowner is facing unexpectedly higher mortgage payments it pays to talk to credit counselor who can assist the homeowner in arranging to make lower payments and defer unpaid interest. Debt reorganization options include arranging for lower payments on other debt obligations so that higher mortgage payments are more manageable. Professional credit counselors can also approach lenders to come to an agreement regarding a pending forbearance.
Many people assume that all home loans are created equal and they simply go with the first loan that they are approved for. The important thing to know when you are looking for a home loan is to know that every loan is different, every lender is different, and every mortgage broker handles things differently. These differences may not seem important when you first start shopping around, but when you get the loan documents and you start looking over the specifics of the offers you will realize that these minor differences can make a not so subtle difference in the cost of your loan ! Many people are in a hurry to get into a home so they simply gloss over all of these differences, but when you do this you could be throwing money away. Do you have money to throw away?
It's Important to Comparison Shop for Home Loans
One of the most important things that you will do when it comes to shopping for home loans is comparison shop. Just like you would do when you were shopping for the house or shopping for a car or another big purchase, you would want to compare the products that are out there and make sure that you are not only getting the best deal, but getting the product that fits your needs the best. When you fail to do this you may be doing yourself a disservice because you could miss out on a program that is better for your specific needs and you could also save yourself some money, too.
How do you comparison shop? You could do this several different ways. You could simply fill out an application online and request that it be sent to several different lenders. Another way that you could do this is go to a mortgage broker and request that they send out applications to several different lenders or apply you to several different lender home loans. When you do this you are putting your feelings out there to see what you will get in return. It is better to have many offers to look over than just assume that the one offer that you do get is the one that is the best for you.
When you are approved for home loans you should then look over the loan documents or official offers and see what all of the details are. You may notice that when a lender or mortgage broker gives you the details about something they give you all of the good things about it and they do not tell you about all of the fees that they have attached to the loan or all of the fees that the lender has attached to the loan. Not looking at all of these things can literally cost you thousands of dollars over the purchase price of the home, why would you do this if you did not have to?
When you comparison shop like this it will also open your eyes to the fact that there are many different loan programs out there for you to take advantage of. You could get into a home and pay absolutely nothing to move in or you could pay as much as 20% down on the purchase price of the home. There are literally thousands of different options out there for you to take advantage of and you should make sure that you are getting the loan program and the loan that will best serve your needs.
A second mortgage is a secondary loan secured against a property. If this loan goes into default, the initial loan must get paid off first. These loans are taken for a variety of reasons and are commonly used as a source of emergency funding.
A mortgage can either be taken out as an installment loan or a revolving line of credit. In all types of home loans, the homeowner puts up equity in the property as collateral. For an installment loan, the loan must be repaid in fixed amounts over a fixed period of time. A line of credit on a home is similar to a credit card, but it is secured by the equity in the home. Home equity is typically the main factor for financing approval but in many cases, a high credit score improves your chances of being approved. This kind of loan is worth considering if one needs to borrow a large sum of money at a low rate.
How to qualify for a second mortgage
Lenders have different methods of assessing loan applications but it basically involves analyzing the homeowner’s equity, job history and credit score. Lenders must see that the applicant has ample credit score as well as sufficient equity in order to approve a loan. If a client’s credit score is below the banks’ requirements, they can only get the assistance of private lenders who prioritize home equity more than one’s credit score. Private mortgage lenders will divide the value of a property with its debts to get a metric known as LTV. The result should be 85% or less to get a mortgage as the lenders are sensitive to low equity amounts. Lenders have a high chance to lose their investment on high LTV mortgages if the loan goes into default. While equity is important to private lenders, some also consider job history.
Uses of a second mortgage
There are no restrictions to what you can do with the money so mortgages are preferred by customers to handle various financial obligations. People have several ways of spending the money but mainly:
• Paying off Debts: You might have a number of high-interest loans bogging you down each month. Instead of trying to keep up and risking penalties, you can get a new mortgage to pay off multiple loans and pay lower monthly rates.
• To keep up with debt payments: The second mortgage allows homeowners to avoid defaulting on their other loans. The money can also be used to bring an existing mortgage back into good standing if the homeowner has defaulted on their first mortgage.
• For home improvements and repair: A property secured loan can be helpful if you need to repair or make home improvements. Repairs and renovations ultimately increase the value of a property and allow you to sell it at a better price than similar properties. Extra equity gained from strategic home repairs could also qualify you for affordable loans in future.
Second mortgages are a good low-interest way to gather money
In summary, a second mortgage is a flexible financial tool and can be tailored to address a person’s unique needs. It makes sense to have a single secured loan at low interest other than multiple credit cards with high monthly interest rates. To gather emergency funding, you can get the cash needed. Unlike credit cards, mortgages are an ideal low-interest way of getting money for university tuition, remodeling a home, paying emergency medical bills or funding a business. These types of loans may come at slightly higher interest rates compared to first mortgage but they are certainly cheaper than credit cards and unsecured loans.
TERM LIFE INSURANCE – Life insurance for a set number or years. You can choose from 5 to 30 year terms. No cash value, if you die during the term you collect the death benefit. The policy dies after the selected term has ended and you receive nothing unless you have a, return of premium rider or you convert the policy to some form of permanent insurance.
RETURN OF PREMIUM TERM INSURANCE (ROP) – A term insurance policy that returns all or a portion of premiums paid at the end of the term if the death benefit has not been paid.
SIMPLIFIED TERM INSURANCE – Term insurance which uses a simple application. Underwriting is done electronically. No underwriting requirements by the applicant unless red flags arise out of the electronic underwriting process. Policy is usually issued much quicker than regular term. There is a limit of death benefit for this type of policy ($350,000 or less) depending on the insurance carrier. This type of policy is generally more expensive because of additional risk by the insurance carrier. Less underwriting =more risk.
CRITICAL ILLNESS INSURANCE – Applied for as a stand-alone policy or as a rider to another life insurance policy. Pay immediate benefit for a covered illness even if death does not occur.
ACCIDENTAL DEATH INSURANCE – Pays benefit in event of a covered sudden accidental death. Applied for as a stand-alone policy or as a rider to another form of life insurance.
MORTGAGE PROTECTION INSURANCE OR DECREASING TERM INSURANCE – Term insurance that pays the balance of your mortgage should death occur. The amount of death benefit decreases to match the amount owed on mortgage. The insurance is set up to end at the same time your mortgage is set to end.
UNIVERSAL LIFE INSURANCE (non variable) – Flexible premiums. Can be a permanent insurance as long as premiums are paid and policy is funded properly. Investment policy in which risk lies with insurance company.
Has a minimum guaranteed interest rate which differs by company. This policy has the ability to gain contract value. The death benefit can be set to level (death benefit stays the same throughout) or increasing (death benefit increases as contract value rises). You may obtain loans or make withdraws but you must be careful, if the policy is not funded, it will collapse.
VARIABLE UNIVERSAL LIFE INSURANCE – Agent must have securities license to sell. Very similar to non-variable universal life. The difference is that the policy owner assumes investment risk. There is no guaranteed interest rate. Policy can collapse if investment does not do well and policy is not funded properly.
WHOLE LIFE INSURANCE – Simply put, you pay the premium and the policy will last your whole life. You usually have an option to borrow against the policy, amount depends on the value of the policy. This type of policy is usually much more expensive than the universal life policy.
GRADED BENEFITS WHOLE LIFE – Partial or no benefits paid until a named or tiered waiting period has passed. If you die before the waiting period has passed, you usually will receive the return of your premium payments with some sort of interest.
FINAL EXPENSE WHOLE LIFE INSURANCE – This type of whole life insurance is aimed at burial and funeral expenses and other final expenses. Usually, no medical exam required and death benefit is limited to $50,000 or less.
SINGLE PREMIUM WHOLE LIFE – This whole life policy is paid for by a single lump sum payment. In return the beneficiary receives a larger death benefit than the payment.
THINGS TO CONSIDER: You may be interested in mixing and matching different types of policies. For example; There is a need for 500k immediately. As time goes on, the kids have graduated college and are out of the house, the house is almost or totally paid off. Now the need is less. In this example you may want to purchase a 330k universal life and a 20 year 200k term. This plan will save you money and still protect your family for life.
Or, you may want to mix term, critical illness, accident, universal life, or whole life in various ways depending on your needs.
Waiver of Premium Rider – pays life insurance premium if you become disabled and can’t work. There is usually a waiting period and rider usually expires at age 60 or 65.
Critical Illness Rider – Rider is explained above.
Return of Premium Rider – Rider is explained above.
Guaranteed Insurability Rider – this rider allows you to purchase an additional amount of life insurance at a later date without having to prove insurability again or take another medical exam.
Term Conversion Rider – allows you to convert a term insurance policy into a permanent policy without proving insurability again.
Accelerated Benefit Rider – this rider is only for permanent life insurance policies. This rider is usually included automatically for free. It allows you to collect a portion of your policy’s death benefit if you become terminally ill with a short life expectancy, usually one year. The portion paid out is subtracted from you policy’s death benefit.
Accidental Death Benefit Rider – This rider pays in addition to the death benefit if you die from an accident.
Child protection Rider – Usually used to pay final expenses if the unthinkable happens. Often, at a nominal cost and purchased in units of $1,000.
UNDERWRITING: requirements depend on insurance carrier, type of policy, amount of death benefit, age, build chart, gender, medical history, medications, family history, motor vehicle report, and other factors.
An application is always required, although, non-medical policies usually have a simple application.
Requirements could be: Paramed (certified medical processor or nurse comes to your place of choosing, takes you through a medical questionnaire, measures your height and weight, takes blood and urine sample, possibly EKG either resting or non-resting), Medical information from your physician or hospital, Medical exam, etc.
HEALTH CLASSES – Typical health classes would be, Preferred Best, Preferred, Select Standard, Standard, and then different nicotine classes such as, preferred nicotine, select nicotine, and standard nicotine.
It is possible to be rated less than standard depending on health and underwriting factors.
You must qualify for a health class. This is chosen by the underwriter after the underwriting process is complete. The agent can only quote you the different health classes but this can change with the underwriting process.
Getting any loan closed these days is hard all by itself. If you should happen to chose a mortgage company or a loan officer that doesn’t know what they are doing, closing your loan just got ten times harder. So here are a few tricks and tips that can help you pick the right one for your loan.
- Make a list of 5-7 loan officers from several different mortgage companies. You might want to ask your friends and family members who they have used and ask if they would recommend them to you. You can also ask your real estate agent or your title company who they would recommend. Remember, you only need one mortgage company at the end of the day.
- Call all the names on your list. If the loan officer answers their phone when you call, put a star by their name. If they get back to you within the hour, you can give them a star also. If they don’t call you back or answer the phone, cross them off your list and move on. You don’t need to enter a working relationship with someone that you can’t get a hold of. Also, professionals value their phone calls. You can be sure that if they don’t pick up the phone now, they won’t answer the phone later either when you are under contract and have an important question.
- Ask the lender how many loans they have closed in the last month. Also, ask for the phone numbers of the last 5 loans that they have closed. You can then interview other customers that have actually worked with your potential lender. If they can’t or aren’t willing to offer you references in the form of happy customers, you should move on to the next name on your list. Good loan officer take pride in happy customers, if they can offer you other happy campers, that is a good sign that you’ll be happy with your loan, too.
As you talk to your potential lender, ask them what loan programs they would recommend. If you do a little homework, you can learn about state funded programs and ask your lender what they can tell you about the specific loan program. There are lots of states with state funded options and it makes sense to find a lender that knows about the local programs and even grant programs that might be an option for you.
Just as a side note, if a any point you end up crossing off all of the names on your list, start all over again with new names and a new list.
Last but not least, schedule an interview with your potential lender. Make a list of questions to ask about the loan process, the closing process and your loan options. Pick one the mortgage company that is able to explain things the easiest to you.
Everyone has heard of flexible mortgages where the amount paid each month varies with the Bank of England base interest rate, but what if there was a flexible payment mortgage where you were given the choice of how much to pay based on how much you had earned each month.
For most people, budgeting for a mortgage is easy. Even with a flexible rate, the interest does not vary that much, so it is fairly straight to budget for. But if your income varies from week to week or month to month, budgeting is made very difficult indeed. For many self employed people, especially if their trade is dependent on the seasons, this is a reality. But if you can be disciplined, a flexible payment mortgage may well be for you.
An adjustable rate mortgage (ARM) means that the lender, be it your bank, building society or specialist company, sends you a statement each month offering you a list of options for that month's payment. Of course, there will always be a minimum payment, but, if work has been good, you will be able to pay more than this. One option may be just to pay interest, so the interest does not build up, even if you are not paying off any of the balance. The problem with these ARMs arises if you only pay off the minimum every month. After a set period of time, you will be sent a statement for the reminder of the term of your mortgage. If you have only paid off a small amount, this will be taken into account, and your balance recast, with a larger minimum amount to ensure you still pay off the entire mortgage in the agreed time it is 25, 30 or even more years. Thus, unless you can be disciplined enough to make the largest payment when the money is there, this type of flexible payment mortgage is probably not for you.
The initial interest rates are usually very low to grab people's attention and get them signed up to the mortgage. This can mean very low minimum payments foir those months when there is not too much cash at hand. But these rates do not last forever and are usually recalculated some point into the term of the mortgage to a far less enticing figure.
The other big downside to having a flexible payment mortgage is the likelihood of negative equity, something always worth bearing in mind. If the market takes a tumble, you want to have built up enough equity in your house not to tumble with it.
Any reputable lender should be able to give good, solid advice about flexible rate mortgages, but, more important is that the advice is impartial. If you are in doubt, go and see an independent financial advisor. It may cost you money to begin with but in the long run, it could save you thousands. And more than anything else, be honest with yourself. If you do not think you are disciplined enough to make the big, payments when times are good, then go with a traditional mortgage instead, or you could end up losing your home.
Buying a home is always a dream that many people harbor at some point in their lives unless they are lucky enough to have inherited a home from someone. As much as some people may be able to acquire a home from gifts or simply to pay for their in cash, a good number of home owners actually have to get some loans in order to finance their home purchase. It is in this aspect that some people are compelled to use FHA streamline refinance options.
One thing that everyone has to understand is that there are rules that one has to meet to qualify for this kind of financing. This means that if you intend to benefit from this plan, you have to understand the requirements to avoid disappointment. It should be noted that this concept was introduced into the systems at around the 1980s and has retained an option for many who qualify to date.
One major aspect that everyone has to take note of is that you can not qualify for the refinancing loan if you do not reside in the property in question at the point of application. The true meaning of this form of loan financing is that it relies heavily on the underwritten value by the mortgage company despite the company has the right to determine the interest rates on the new loan that you may get to service the existing one.
There are cases where the persons in whose name the mortgage is underwritten may default in their payments of the loans. This often may attract some kind of penalies but under this new system, there are several options that can help someone who is in this tight spot to overcome the situation.
For starters, it is now possible to introduce new names into the title in the course of the refinancing loan. This gives the holder of the title an opportunity to look for variable ways of funding for the loan. Insurance however is a must in order to qualify for any other loans.
The interest payable on the already existing loan always plays a major role in determining whether you will qualify for the loan. It is mandatory that the second loan must have lower interest rates otherwise it will not be approved. If the new loan has a higher interest rate than the existing one, it means there is absolutely no need for it.
This is mainly because it would not make sense to look for a higher interest earning loan loan when you are already applying for the same because you have been unable to service the first one. This would be tantamount to committing financial suicide as chances of losing the house completely are even higher.
It is important to note that the number of years for servicing the FHA streamline refinance loan is also limited to less than 30 years which should be the maximum for the first loan and a bonus of another 12 years top add on. Anything beyond this limits is not acceptable.
The prices of homes are constantly on the rise making the real estate a very lucrative form of business. A large number of people are unable to buy their own homes as it is beyond their means to pay large monthly installments. There is an aggressive competition among mortgage loan providers in California to increase their market share. They come up with lucrative mortgage options to make their presence felt in the mortgage market. However, it is advisable for new and inexperienced borrowers to seek professional advice from mortgage experts who offer guidelines to borrowers to make a viable choice.
Mortgage companies apply the mortgage rates on the principal loan amount after verifying several factors such as the borrower's credit history, type and location of the property and the term of the loan. Conventional mortgage loans generally come with a term of 15 to 30 years. However, a longer term of 40 or 50 years can be offered to young borrowers who can not afford high monthly payments.
Many mortgage loan providers offer mortgage loans at unbeatablely low prices to lure borrowers. However, very low interest loans are generally offered to borrowers with a decent credit history. Several mortgage companies provide online mortgage calculators to give a fair estimate of the mortgage payments to potential borrowers. These calculators usually do not evaluate the insurances and taxes during monthly payment calculations.
There are mortgage providers in California that offer mortgage loans to borrowers with a bad credit score. However, these loans are accompanied with high interest rates due to the risk associated with such borrowers. It is advisable for borrowers to verify their credit score prior to a mortgage loan application. Borrowers may be able to get a better deal if they improve their credit score in time.
It is very important to obtain loans from reliable mortgage companies. Many mortgage providers approve loans higher than the borrower's paying capacity. This may lead to accumulation of debts or bankruptcy.
Since California is an earthquake area area, many borrowers prefer to buy earthquake insurance. Borrowers can buy this insurance from California Earthquake Authority (CEA).
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