Mortgages & Loans Info

What Is An Assumable Mortgage Loan – Read All About It

If You See An Assumable Mortgage – Grab It

People are asking what is an assumable mortgage ? What does an assumable mortgage do for me? What are the main benefits of such mortgages and what are the pros and cons of assuming a home loan. The assuming mortgage markets has three sides the seller side and the buyer side and the lender side. In this short review you can read more on assumable home loans and their pros and cons on each of the parties involved.

What Is An Assumable Mortgage

Assumable mortgage is when the seller sells the home together with the mortgage liability on the property to the buyer.

This financial situation will be beneficial to all sides (except the lender..) when the seller has a low mortgage rate on the home, and the current market rates are much higher. The buyer if he wants to buy the home, he will need to apply for a mortgage at current market rates, which may end up in an expensive mortgage and high payments.

Because the seller sells the home with the mortgage on it to the buyer, the lenders looses the delta between the seller rates and the current rates.

For example: If a person buys a home and took an assumption mortgage at 5%; a few years later the mortgage rates rise up to 8%. When the seller will want to sell their home, the buyer can either apply for th current 8% mortgage, or buy the home with the existing 5% mortgage left on it.

In this example, the seller will be able to sell their home in no time! Because the home has a huge incentive value to it; in some cases the seller will be asking for a price higher than the market value to benefit from the assumption mortgage added value. The buyer has an incentive to buy the assuming mortgage, and they will save 3% on the mortgage interest and saving on all the settlement costs on a new mortgage.

If it is so lucrative… Where is the sting?

Lenders Don’t Like Mortgage Assumptions

The only side loosing from such deals are the lenders. So they have an incentive to block such assuming loans from rolling between the seller and the buyer. Most lenders will block any option for such assumption mortgages by lenders have inserting due-on-sale clauses in their notes.

This means that when you get the loan you sign that in case you sell the home in the future you must pay off all remaining mortgage left on the home before the liability is moved to the buyer. With these due-on-sale clause most lender block their future losses if the interest rates rise.

Some lenders will allow the mortgage assumption, which will save some of the mortgage costs, they usually allow the mortgage loan assuming that the interest rate will be current as the market rate at the time of the new transaction between the seller and the buyer. Of coarse this takes the value from the assumed mortgage loan, if the rates are raised than the buyer has no incentive to get the home with the mortgage on it.

Remember that the buyer will need to pay the seller all the equity built on the home usually as down payment. On top of the  large down payment the buyer will be forced to pay a high (current) mortgage rate to the lender.

All except the FHA and the VA loans. The FHA mortgages are assumable mortgage loans allowing the seller to assume that future rates will rise, and to sell the FHA backed mortgage to the buyer with the lower rates as a bundle deal.

FHA Assumable Mortgage Loans In a Nutshell

What is an FHA assumable mortgage loan? these types of home loans are still available today, and they can be a smart investment because the national mortgage rates are near the lowest point they have ever been. This means that as a buyer you buy a low interest rate and also the knowledge that in the future you could sell your home at higher price (the assumable mortgage  has value!). The assumable FHA mortgage loan may cost some more because of the insured mortgage fees, but this is probably worth the price as this mortgage could be sold later on with a home at a higher market value.

The FHA assumable mortgage loans are valuable when the seller wants to sell their home in the future. In order for the buyer to be able to get the assumable mortgage loans, the buyer will need to qualify as regular FHA home mortgage borrower. If they meet all the minimum FHA requirements, the mortgage could be transfered to the buyer and all liabilities on the home are passed together with it.

There are several ways to calculate the value of the assumable mortgage loan to the buyer and to the seller, as they will both want to benefit from the value this kind of home mortgage holds in the unstable markets ahead. These calculations include the saving on settlements costs and fees, savings on the mortgage rates, and on the investment value of the savings  from the assumable mortgage loans for the time the buyer plans to stay at the new home.

5 Critical Steps At Mortgage Closing Meeting

Step by Step Tips When Closing Your Mortgage

The steps at the mortgage closing meeting can be very important, and should be planned ahead, and done correctly. The lender and the mortgage broker have been doing such mortgage closing meetings quite a lot, and can review this process with you. Here you can read the steps which will be done from the beginning to the end of the meeting.

Invest In Education

If you are in a process of a mortgage shopping or approval you must invest in some mortgage education. Now that is not free article reading like you are doing know, thats just filling your ceriousity.

The tips and tricks you realy need to know, you will not find ‘free’ on the internet. If you think education is expensive… try ignorance. This becomes true when it comes to mortgages. People just know too little about the process, and the lenders rape them with fees and costs that mey be easily avoided. Your golden hen will be learning ‘inside information’ from a former banker who have broken the lenders ‘code of silence’.

See – The Mortgage Loan Tips.

You will see below 5 critical steps and tips to know prior to the mortgage closing meeting – they will be highlighted.

Who Will Be Attending The Mortgage Closing Meeting

As mentioned before, your mortgage broker, mortgage attorney or the lender may have been in many mortgage closing meetings. The best advice would be to ask them how they expect the meeting to take place, which documentation and proofs they might want to see. This is important, because when these requests come up in the meeting and all the eyes are turned at at you, you better be ready.

Unlike all the meeting which you have been attending until now, the closing meeting may be a bit more crowded. All the people who have are connected to th deal should be there. Tip 1 - Ask in advance who will attend so you know can prepare better, if the seller brings an attorney – bring an attorney too!

Who may be attending this meeting :

• You – The buyer and borrower.
• Your mortgage broker
• The Seller (and his/her spouse partner)
• Their mortgage broker
• The lender and their attorney
• Or Title insurance or Escrow company which are permitted in some states to manage these meetings.
• Your attorney (recommended) or the seller attorney if they have one (recommended)

Prepare The Documentation For Closing

At the mortgage closing meeting will a lot of documentation signed and reviewed. Make sure you ask and prepare th documentation exactly as requested. If you think that you have not collected all the papers and approvals, contact the lender and double check. If you have difficulty knowing which information will be expected, ask even twice to be sure, you know.. ’better safe than sorry’ is relevant to the mortgage closing meeting too.

Here are some of the documents and issues commonly YOU will need to be responsible of completing before the mortgage closing meeting:

• Homeowners Insurance – The lender would like to see that you har insured by insurance for any physical damage to the property. Tip 2 - Make sure you know exactly which hazards the insurance you do covers, as the lender may want a specific insurance on common or uncommon hazards like floods, fire, earthquake, tornado storms. That is why this is called too Hazard insurance.
• Title Insurance – This insurance protects the lender from last minute ‘surprises’ – They have seen everything and been in such positions that anything may be possible for them like “unknown heirs”, forgery, credit identity theft…
• Title search report – This is important to have as it is the legal documentation proof that the property is clean from any liens, negative marks and it is ready for the legal ownership to be transfered.
• Termite, well, sewer or septic certificate – Some lenders will ask for these items to be pre-checked and certified. This may be part of the appraisal check “as is”, or may be items that must be repaired prior to the completion of the mortgage transaction. See the FHA appraisal guidelines 2011 review.

What Will You Be Signing At The Meeting

Documentation For The Mortgage closing meeting (might vary from state and property involved)

• HUD-1 Settlement Statement – This is the final document with the fees, credits and costs concerning the real estate terms you and the sellers agreed upon.  The  HUD-1 Settlement Statement may be slightly differnt from the Good Faith Estimate (GFE) document. Tip 3 - The fees in the HUD-1 should not be ore than 10% higher from those presented at the GFE. Tip 4 – Get the HUD -1 document three days in advance, as you may be requested to bring a bank cashier’s check, because your personal check may not be accepted.
• Truth in Lending (TIL) disclosure – This is part of the Truth in Lending Act (TILA), is a document you should have received by the lender, it summarizes your expected annual percentage rate (APR) payments. In this document there will be all the figure about monthly payments, rates, interests, fees and all the mortgage financing figures. Tip 5 - Since the TIL may be changed over the period of time and party agreements. By law your lender must send you the most recent TIL document they have, if had been modified they must allow you to see the recent one before the mortgage closing meeting.
• Promissory Note – This is a document where you sign that you will be paying all th payments on time. It is a ‘mirror’ document to the Truth in Lending, it summarizes your part of the deal.
• Loan Documentations - These are the documentations of the mortgage loan, with all the lien explained that if you are late on your payments, your new home you have just bought becomes the property of the lender. To prevent this from happening – You can learn how to ‘smash’ your mortgage.
• The Deed – This is the document which transfers the ownership of the home over to you – Congratulations! You are a home owner!

Well, you are not a homeowner yet.. the home belongs to the lender until the last payment is fully paid… For the best mortgage with the lowest rates and no ‘junk’ fees make sure you get the  Mortgage Loan Foolproof Tips.

Paid Outside of Closing (or POC) 2011

HUD-1 Costs Paid Outside of Closing

When you are in the process of a buying a home mortgage you ought to know all the expected fees and costs that are waiting to be paid outside of closing (POC) in the mortgage deal. In the  The Department of Housing and Urban Development – HUD RESPA forms several costs are mentioned and those are included in the mortgage loan, some are not on the list but will need to be paid outside of closing.

The best advice would be to self-educate yourself on mortgage loan tips. You do not need to be a certified loan officer, but the most valuable thing you can do, is learn from a former loan officer how to get the lowest rates, and avoid paying lenders ‘junk’ fees. Yes education costs, (not much) but ignorance is by far more expensive. Mortgage tips & tricks quick education program.

HUD and Homebuyers

The HUD RESPA is made for exactly this purpose, as from January 1, 2010 all the costs are expected to me mentioned and stated clearly. The payments and fees which are paid outside of closing (POC) are also mentioned in section 1400 at the HUD-1 forms. RESPA (Real Estate Settlement Procedures Act) is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.

HUD-1 or HUD-1A Settlement Statement

Before you go to settlement you are entitled to get what is called HUD-1 or HUD-1A statement of settlement costs. This HUD-1 or HUD-1A show all the costs, fees and charges you will have to pay throughout the life span of the mortgage settlement. In the HUD-1 you will see all the initial terms of the loan and each and every monthly payment due. In the new 2011 revised HUD-1 there is a better comparison ability between the HUD-1 and the GFE (Good Faith Estimation) you received with the mortgage quote.

What Closing Costs Include

The HUD RESPA has a specific list of cost which should be clear and correct when added to the closing costs of the mortgage, (“800″ series on HUD-1 form) within this list are:

• Loan Origination Fees,
• Lender’s Inspection Fee,
• Mortgage Insurance Application Fee,
• Assumption Fee,
• Title Charges
• And more..

Costs Paid Outside of Closing (POC)

There are several payments that are processed outside the mortgage and those need to be written at the POC section in the HUD-1 forms. These costs are usually payments of fees such as those for credit reports and appraisals. Those are funds you will need to add to your (ever growing) expense list and because they are paid to a third party (credit report check) and paid by you before the closing or settlement of the mortgage loan.

Many people are confused by this POC – Paid Outside Closing, because they pay money at the closing settlement and do not know what to include and what to exclude as POC. The rule of thumb is that any thing paid by the borrower at the closing table is not a POC item. Any thing you pay outside the closing settelment but are a must to complete the process and are not financed through the mortgage it self are POC, as they are paid outside the closing.

POC Conclusion

Fees that are payed by the lender (to their service providers) after the closing of the settlement are usually added to the loan itself and are not paid separately by you, so those should not be added to the 1400 section at the HUD-1 form as they are not – Paid Outside Closing.

If you are within a mortgage process and haven’t invested in any ‘mortgage guidelines education’, you are probably very rich. See the mortgage 100% independent loan advice blueprint written by ex-mortgage banker who breaks their “code of silence”.

How to Negotiate Loan Origination Rates Down

 Negotiate Loan Origination Rates

Negotiating is not only for pros, you can negotiate yourself just about anything. You will never make money faster than around the negotiating table.

When you decide that you need a mortgage for buying a new house, you turn to find a lender who is willing to borrow his money to you. Like any other place where you find someone to outsource a job, that will cost you money. This origination fees are fair to be paid, but they are also like all mortgage closing costs.. negotiable – meaning they can be reduced even more by you.

Once you reach the end of this page, you will see a link to the most vital aid you will need right now – ‘Mortgage Loan Tips’. This program will teach you how to avoid paying lenders ‘junk’ fees and staying away from brokers ‘traps’, and why some people get the lowest mortgage rates while others pay much more!

What are loan origination fees? 

The first step to get your own mortgage and home loan will be a process of pre-qualification with the loan officer who helps you through these first steps. Since it is wise to get professional financial aid through this process turning to a loan broker or loan officer is the smartest move for you in this stage.

Before the bank or lender agrees to give you hundreds of thousands of dollars there is a simple qualification step to pass.

It is very common that the bank or lending company will ask the loan originator to supply certain credit, asset, employment, and housing information to a specified bank or lender to initiate the underwriting of the loan application. 

Loan originators are loan officers (mortgage brokers, or simply sales people) it is their job to make sure you get all the qualification papers and documentation right. They know what is important, what federal laws or countrywide blue print are needed, they can answer some taxation maters and understand in house and mortgage insurance. 

Loan origination fees are paid to the loan officers who do this process.

Mortgage Closing Costs Negotiation Tricks

A loan origination rate is a negotiable payment outside the mortgage loan payments. This originating loan fees, you will be asked to pay in cash at mortgage closing. So before you hire a loan officer, ask what are the fees that you will be needed to pay through the process?

1. The first rule of negotiation mortgage fees is information! Know what the average loan originating costs are. Search loan brokers’ websites and ask for an offer for service. Get at least 3 offers before you decide who to begin with.

2. The second rule of negotiation home loan costs is have a BATNA (best alternative than negotiated agreement) a secondary offer from a loan officer you might go with if the first deal will blow away. Having a second offer in hand makes you able to leave the table if your requests are not met.

3. The third rule when you negotiate mortage closing costs is – Always show disapproval from the loan officer first offer. Make a face, move in your chair, raise your voice in shock “what?! A thousand dollars! That’s way over what we planned to pay”

4. The fourth rule – immediately declare a number! Now stretch your limits! Try to ask for a ridicules percentage reduction. If the loan officer asks for 1000$… Don’t ask for a polite discount of 10%… (900$) Say you are willing to pay HALF! Now both of you KNOW you will meet somewhere in the middle… (750$)

Mention here you have another offer – your BATNA (don’t say how much fees they asked for there !) just say it is much lower than what you are asked to pay now…

Because the loan officer wants the deal and he is already involved deeply with you, watch him cut his fees lower than you imagined.

If you are a step away from a mortgage loan, stop and do not do another move, before getting the Mortgage Loan Tips – It will save you more money than you ever imagined, with some mind blowing insights only professional mortgage brokers know.

More to know on origination fees and rates

#1 The origination fee is deductible if it was used to obtain the mortgage and not to pay other closing costs. The IRS specifically states that if the fee is for items that would normally be itemized on a settlement statement, such as notary fees, preparation costs and inspection fees, it is not deductible.

# 2 There are also Mortgage Discount points: These are actually prepaid interest on the mortgage loan. The more mortgage points you pay, the lower the interest rate on the loan and vice versa. So if you have enough cash on hand, you can pay them in advance and lower your mortgage interest rate.

# 3 Borrowers typically can pay anywhere from zero to 3 or 4 points, depending on how much they want to lower their rates. This kind of point is tax-deductible

# 4 If you have enough mortgage cash on hands, you can pay mortgage origination rate and save money on a lower mortgage interest rate. In any case you are in a great position for negotiation with the bank or loan officer for a better interest rate… or you walk from the deal…

Negotiating Fees Conclusion

While some people learn how to get lower rates, others pay usually much more… Invest in mortgage ‘tips & tricks’ education Check Here to Learn More.

Rent vs. Buy Calculator

Rent vs. Buy Calculator

If you are in front of a financial possibility to buy a home with all your savings down payments or considering to keep on renting a place to live in. This Rent vs. Buy Calculator will help you see the numbers behind this decision.

Why use rent vs buy calc ?

Rent money and monthly rent payments gives the feeling you are ‘wasting’ money throwing it away, or making some one else rich while you do not enjoy the investments. If you are in the US or in Canada this rent vs. buy calculator is your personal calculation aid.

If you need take a look at the mortgage financial definitions page.

Should you rent or should you buy your home?

 It requires a lot more than considering the mortgage loan month-to-month payment to reply to this specific issue.  This calculator makes it possible to filter through the mortgage closing costs, property taxations, and monthly bills to be able to enable you come up with a final decision involving these two options. This report will be based upon the initial buying price, fees and taxes payable at that time. Insurance coverage and taxes expenses may vary from year to year.

On the other hand buying a home which means taking a mortgage loan, and being tied up tightly to the banks and lenders companies. When buying a home you usually asked to place 20% cash down at the beginning of the deal. This means you either give all your savings or get into a deeper credit problem if the money is lend by others.

So Rent vs. Buy Calculator is exactly what you need right now to check which money invested is the best for you. Rent vs. Buy calculator of the new york times.