Mortgage Counseling Services You Need

Mortgage Counseling Services You Need- 150x150Many people wouldn’t be able to afford a home without mortgage loans. Mortgages might come with some disadvantages, but are a great way of making sure that you have a roof over your head, and something to leave your kids. Paying off a mortgage is a great feeling, the feeling that you are truly a home owner, but getting there requires some careful budgeting, because there will always be the risk of not being able to afford paying your mortgage anymore and losing the home.

Being a responsible home owner is mostly up to you, but looking for help when you think you need it is nothing to be ashamed about. Just like marriage counseling can save a marriage, mortgage counseling can help you make the best decision regarding what type of loan to take out and what you can do to make sure that paying off your mortgage goes smoothly and with no major problems. Home buyers who receive mortgage counseling prior to making a home purchase are less likely to default on their mortgage, and less likely to even be late or miss mortgage payments.

Mortgage Counseling Services

You have many mortgage counselors to choose from if you need help understanding your mortgage or making sure that you make the right choice, but it is recommended that you visit a counselor that is government approved. By doing this you are making sure that you receive the most up to date and complete information.

Before setting up an appointment with a mortgage counselor, make sure that you gather as much information as possible about your mortgage, account balances and debt, income, and find your most recent tax return. Being able to show all this info to your counselor will ensure that your paperwork will be filled out much easily. These documents will also help your counselor work with you to determine a budget that accommodates your financial situation and needs. Here are the most important services that mortgage counseling organizations are offering.

  • Pre-purchase mortgage counseling. Many home buyers need help in deciding which type of mortgage loan to choose. Making sure that you pick the right one, with the right terms, is probably the most important thing you can do when shopping around for a mortgage loan. The down payment that you will have to make, the interest rate that you will be paying, the length of the repayment period, and all the fees that you will be paying must be discussed before you decide on a loan, in order to find out if that type of mortgage will be right for you.
  • Post-purchase mortgage counseling. A large part of your income will go towards paying your mortgage each month, and some home buyers might find that a little overwhelming. Post-purchase counseling can help you better manage your monthly expenses as well as give you advice regarding mortgage refinancing and other loans that you can take out. This type of counseling is also very important, and can make a big difference if you are struggling, or are unable to make a decision regarding your mortgage loan.
  • Mortgage refinance counseling. Refinancing is a great way of lowering your monthly mortgage payments by taking out a new mortgage loan to replace your current one. Unfortunately, refinancing is an expensive process which can actually end up costing you more than you expected if you are not sure what you are doing. A refinance counselor will work with you to determine if refinancing is the right step, and how much you will be saving over your current mortgage rate.
  • Mortgage default counseling. At one point during your life, you may encounter some problems that will make paying your mortgage difficult. In order to avoid foreclosure, you can hire a mortgage default counselor, who will help you address the problem in the best way possible. When faced with losing your home, it would be better to get professional help than to try to do things yourself. Receiving the proper help in this situation can make a big difference and your chances of keeping your home will be much higher.

Unless you feel that you have good knowledge on the subject, mortgage counseling services can be very helpful and save you money and trouble in the long run. Being prepared when the time comes to take out a mortgage loan or refinance your mortgage makes a large difference over going in blindly and ending up losing money, or even your home. Mortgage counseling services are designed to help you become a home owner, and deal with the problems that may arise in the life of a home owner.

Taking Out a Third Mortgage- Is That Possible?

Taking Out a Third Mortgage- Is That Possible- 150x150Taking out a third mortgage is significantly more difficult than it was a few decades ago, when this type of mortgage was a lot more common. Third mortgages were given out without any strict requirements that are necessary to protect the lender, and that resulted in a housing crisis which caused many people to lose their homes. Nowadays, lenders are much more careful when giving out third mortgages, and most are actually choosing not to give out another mortgage to borrowers who are already in the process of paying back two mortgages.

Normally, when a borrower with multiple mortgage defaults, the first mortgage is prioritized over other mortgages, making a third mortgage a high risk for lenders. In case of a default, third mortgage lenders have to wait until the lenders for the first and second mortgage recover their money. Even if a lender agrees to give out a third mortgage, the interest rates on this mortgage will be much higher than the ones on your first mortgage and even the rates on your second mortgage.

These mortgages are based on collateral, so the higher the value of the collateral, the bigger the chance that the borrower will receive the third mortgage without much difficulty. If the borrower defaults, then the asset used as collateral, usually a home, will go into foreclosure, and the lender recovers part or all of his money.

What are Third Mortgages Used For?

While first and second mortgages usually pay for the home itself, third mortgages are usually taken out in order to make home improvements or repairs, which help increase the value of the property. They can be used to make additions to the home, such as a swimming pool or a garage, or to renovate the kitchen, the bathrooms or other areas of the home.

Securing a third mortgage is difficult and you must keep in mind that you will most likely have to make monthly mortgage payments on all three of your mortgages at the same time each month, and that the third mortgage will come with a much higher interest rate than the other two.

How to Get a Third Mortgage

Getting a third mortgage begins with shopping around for a lender willing to give you one. First, talk to your current lender, which may give you a good deal if you are a good borrower, with no missed or late payments on your first two mortgages. Even if your current lender agrees to give you a third mortgage, it never hurts to look around a bit more, because you could find an even better deal with a different lender. You will need to submit several documents, and your lender will verify everything, including your credit report. Besides documents such as your Social Security number and place of employment, you will need to submit documents that prove your income, such as a W-2 form and pay stubs.

You will have to pay for an appraisal in order to determine how much equity is in your home. The lender will decide how much you can borrow on a third mortgage based on the equity in your home. If everything is in order and the lender is satisfied with the equity in your home, they will grant you the third mortgage loan and you will have to pay the closing fees.

If you have a good financial situation and enough equity in your home, taking out a third mortgage shouldn’t be extremely difficult. But keep in mind that the lender will protect himself by having very strict lending requirements for such a loan, and probably give you a much higher interest rate.

Zombie Titles: You Need to Know About These!

Zombie Titles-You Need to Know About These- 150x150Many Americans ended up having their homes foreclosed by lenders after the recent recession. Losing a home is a painful experience for the owners and an expensive one for lenders. That’s why sometimes lenders would send out a foreclosure notice, but don’t actually go through with the foreclosure. Normally, when home owners receive the foreclosure notice, they pack up and move out, thinking that the bank will take their home from them. This is not always the case, as sometimes banks don’t follow through with the foreclosure and the title ends up remaining in the name of the home owner who just abandoned his home, thinking the bank was going to take it as it happens in the foreclosure process.

Lenders are not legally required to foreclose on a property when the home owner defaults, and are also not obligated to notify the home owner that they have decided to dismiss the foreclosure, even after the foreclosure notice has been sent out. Lenders choose to sometimes dismiss foreclosures because of the high cost associated with a foreclosure or if they have a surplus of inventory.

You Own the Home Until It is Sold

Just because you choose to leave a home doesn’t mean that your name won’t be on the title anymore and you won’t be responsible for the home anymore. In this case, even if the lender sends out a foreclosure notice, you will still own the home until it is sold at a foreclosure auction by the bank.

Walking away from your home once you have been notified of the foreclosure is not enough to stop being the legal owner of the home. It is your responsibility to see the foreclosure process through, and make sure that your lender didn’t just dismiss the foreclosure and you left the home while still owning it.

A Zombie Title Can Be a Big Financial Burden

After receiving the foreclosure notice, you may have chosen to abandon the home, and move on. Foreclosure will negatively affect your credit score and ability to buy a new home, so renting will probably be your best option. But, if you haven’t made sure that the foreclosure process is finished, you might end up finding out that you still own a home. This can happen months after you thought that you have lost your home for good.

An unoccupied home can become a target for thieves and fall into disrepair. Besides still being responsible for paying taxes on your property, you will also be held liable by the municipality or local government for repairs and maintenance on the property. You will most likely have to pay penalties and fees for leaving the home to fall into disrepair and ruining the overall atmosphere of the neighborhood, even potentially facing legal action.

How Can You Protect Yourself Against Zombie Titles?

The easiest way to make sure that you don’t end up with a zombie title that can make your life even more difficult than a foreclosure would is to make sure that the foreclosure process is completed. Leaving your home once you receive the foreclosure notice is a bad idea. You can still live in the home until your lender sells it, while having the opportunity of making sure that your lender actually goes through with the foreclosure.

Foreclosure is hard on anyone, and it is followed by having to find a new home and years of working on repairing your credit score. But before you start to rebuild your credit and find a new place to live, you should make sure that your home is actually foreclosed on. Having a zombie title on your hands will only attract more financial losses and headaches. So start researching what the foreclosure process entails and avoid a messier situation than the one that you are in already.

5 Tips to Protect Your Mortgage from Default or Worse

5 Tips to Protect Your Mortgage from Default or Worse- 150x150Becoming a home owner is expensive and takes a lot of work, but most people don’t realize that, once you have bought a home, you will, most likely, have to work even harder to keep it. Owning a home is significantly different than renting and, while it brings a lot more satisfaction, it is also more expensive. The habits that allowed you to transition from renting to owning will have to be kept up if you want to avoid default and losing your home.

Many times, things that will be out of your control will happen, and you will be in danger of losing your home, but there are also plenty of things that you can do to avoid that. Giving up your home is a nightmare and downright depressing, and you will want to avoid that at all cost. The good news is that, even when you are in danger of losing your home, you have options. Following the tips listed in this article will save you from having to endure a painful mortgage default.

What is a Mortgage Default and What Does it Entail?

Mortgage default happens when a borrower is late on a monthly mortgage loan payment or is unable to make mortgage payments anymore. Other actions which break the mortgage agreement, such as not paying property taxes, may also lead to mortgage default. The default allows the lender to foreclose on the mortgage home, in which case the home owner will most likely lose the ownership.

Mortgage default normally happens after the borrower is 30 to 60 days late on his mortgage payments, or when the borrower fails to pay the property taxes within 30 days after he or she was notified by the lender and asked to remedy the situation. In order to better understand when default happens in your case, you should carefully examine your mortgage documents, because the rules will be different from one lender to another.

Tips to Protect Yourself from a Mortgage Default

Trouble with your mortgage can start with just one missed payment, but it’s usually all downhill from there. The best way to avoid this kind of trouble is to plan ahead. Mortgage payments are, most likely, your largest monthly bill, so recovering after one missed payment is really hard. Here are a few tips that will help you avoid being late or missing mortgage payments:

  1. Keep savings. Saving when you have to pay off a mortgage loan is very difficult, but it is not impossible. Examining your monthly budget and cutting out unnecessary expenses, such as going out to eat or impulsive spending, can go a long way when it comes to saving money. Having even a few thousands saved up can be a real blessing if you have trouble making a monthly mortgage payment.
  2. Make the monthly payments. Having a plan in place and making timely monthly mortgage payments is the easiest way of avoiding mortgage default, but that might not always be possible. If something unforeseen happens and you are not able to make that month’s payment, pay what you can and call your lender to explain the situation and discuss options. You would be amazed at what a simple phone call can do to help you avoid getting into more trouble with your lender.
  3. Talk to your lender as soon as you have a problem paying your mortgage. Don’t wait until the monthly payment is due, you receive a notice or, even worse, go into foreclosure. Call your lender as soon as you see signs of financial trouble, explain the situation, and work with them to find a solution. As long as you are able to recover, your lender will most likely present you with a few alternatives, which will save you from default. Default and foreclosure are complicated and expensive processes for your lender, as well, and he will prefer to have you get back on track with your mortgage, than spend more money getting you out of your home.
  4. Understand the process. It may take up to 6 months until you will actually have to leave your home, so that gives you plenty of time to examine your options and take action. Panicking is the worst thing you can do, so the best thing to do is to talk to a professional and try to work something out, so your home won’t have to go into foreclosure.
  5. Consider refinancing. By refinancing, you will be paying your remaining mortgage loan by taking out a new loan. Refinancing is a good way of avoiding mortgage default, but you can also end up with higher monthly payments, so do your homework before you consider this option. Mortgage refinancing can also be an expensive process, a fact which must be taken into consideration when comparing the amount that you have left on your original loan to the new loan.

Mortgage default and losing your home can best be avoided by planning ahead and saving some money. Unfortunately, that is not an option for many home owners, so following these steps and acting before it is too late can protect you and your family from the risk of default and ending up having to give up your home.