Mortgage calculators can be crucial for people who are looking
into buying a home. While it is nice to think that people can
buy a house without having to deal with a mortgage, most people
who buy a home require a loan. The numbers and equations in
obtaining a mortgage are enough to confuse anyone. Many people
simply talk to their mortgage broker or the lender to try to
figure out exactly how much a mortgage will cost them. There is
a way to be informed on the mortgage as a first step to making
any decisions. By using a mortgage calculator, you can figure
your payments and basic costs. There are various calculators
which can help you in any number of calculations.
 
What Calculators are available?
 
There are calculators available for almost any purpose you can
imagine, below is a basic list available for mortgage purposes.
 
- Debt Consolidation Calculator – Work out the benefits of
consolidating your debts.
- Cost Calculator – Work out how much it’s going to cost you to
buy your house.
- Repayment Calculator – What are your repayments going to be?
- Borrowing Calculator – How much will a lender offer you? This
is usually a very general calculator. The only definitive way to
assess this is the speak to your lender or mortgage broker.
- There are also calculators for car loans, calculating balloon
payments, the effect of extra repayment, lump sum repayments and
many other purposes.
 
Know What You Can Afford
 
The first major benefit of a mortgage calculator is the ability
to figure out exactly what you can afford. While many people can
understand what they can afford as far as monthly payments are
concerned, they are unsure how interest and everything plays
into the numbers. The mortgage calculator gives you the luxury
of playing with the interest rate, amount of deposit, and loan
term to figure out what you can afford, and how to arrive at the
loan amount that you can afford.
 
Know What Small Changes Do to your Payment
 
The next benefit is the simple idea that the mortgage
calculator allows you to play with the numbers at will to
understand exactly how changes affect your monthly payment. By
playing with the different numbers you can figure out the best
way to get what you want in a realistic way.
 
Know your Price Range
 
When buying a house people often find they are unsure of how
much they can afford. How does Interest rate or deposit impact
the price they can afford to pay for a house? What is the
maximum purchase price? Some people believe they can pay a
certain amount, but can actually pay more. Being informed will
allow you to buy better and give you an advantage when
negotiating with the vendor.
 
Do Mortgage Calculators have limitations?
 
Mortgage calculators are a fantastic resource as a first step
to securing a mortgage or buying a house. The simple nature of a
calculator is also its greatest limitation; there are many
factors to consider in obtaining a mortgage that a calculator
does not cover. For example, a calculator does not look into
your credit worthiness or the impact a credit default has on the
interest rate, or the amount you can afford. It also does not
consider or have the ability to work out exact loan costs for
your particular situation. Mortgage Calculators should be viewed
as a first step asset to obtaining a mortgage, but know they
have their limitations.
 
Summary
 
When using a mortgage calculator, you can begin to educate
yourself on what you can afford the basic costs and the benefits
of various loan situations. You can have ready access to online
calculators or even computer based calculators without dealing
with a lenders sales pitch. Calculators are great as a first
step to obtaining a loan or a mortgage, but know the
limitations. Where possible make a call to a mortgage broker or
a lender as the next informed step to obtaining a mortgage. When
trying to restructure a mortgage, or to entering into a new one,
the mortgage calculator can help you understand what you can do,
and what you cannot afford.

About The Author: Colin Kidd is a specialist in sourcing loans
for people and businesses also requiring a Mortgage Calculator.
Colin Kidd is the director of Loan Saver Network and has been
providing finance options since 1999. For more information on
Mortgage Calculator please visit http://www.loansaver.com.au

Financing Tip of the Month – April 2009

I can’t believe that even with the things going on the economy the 30 year fixed rate loan is down below 5%!  I’ve actually seen rates as low as 4.6% for a fixed rate loan.  With the average right now as of this writing it’s down to 4.89%.  So needless to say mortgage applications are up.  People are going to start buying homes again and going to start re-financing again.  The tip today is this.  If you are going to re-finance or do anything, I would suggest that you get a fixed rate loan.  Do not do an ARM (adjustable rate mortgage) or anything like that.  Right now you can get a 30 year fixed rate mortgage for under 5%.  That is so strong.

Think about all the other bills you have right now.  If you are currently a homeowner, and you have any equity in your home, you can refinance your home to pay off other debts if you can still qualify for a loan.  You can look at your situation and refinance your home to pay off credit cards, car loans, etc.  Currently that mortgage interest is tax deductable.  I’m not a CPA, or a tax professional.  And I would advise you to talk to a tax professional.  However, as I understand it, car loan interest is not tax deductable unless it is a business owned car.  Credit card interest is not tax deductable unless it is a business credit card.  But mortgage interest IS tax deductable.

You could pay off your credit cards, you could pay off your vehicles, and you could refinance your house and get a low fixed rate loan below 5%.

Now, if you need to move some things around perhaps you need to talk to friends or family to get some assistance paying those higher interest items off first.  A temporary loan to lower your debt to income ratio could provide this.  Then the loan that refinances your house could pay back that temporary assistance and lower your interest rates.  Talk to friends, parents, aunts, etc. and get the loan you need to pay off the credit cards.  Be very careful when you do this.  You don’t want to take on additional debt that you cannot pay back.  Only get help from family if refinancing will enable you to pay them back quickly.  This is a way to reduce your debt and to perhaps even free up some cash to give yourself some breathing room.

In addition to that, if you are in a situation where you own a home free and clear or its almost paid off, you may want to consider getting a 60-70% loan to value loan and using that for your real estate investing.  A word of caution here.  Be very careful not to invest that money into anything risky that will keep you up worrying at night.  But if you use the money for something valuable or to create value, something that will make you money, you can make a very wise financial decision.

Over at TheCoachingClub.com I’ve just uploaded a new video that teaches what we are doing with our money.  You will find that in the video section at TheCoachingClub.com.  As you know by now as a newsletter subscriber you can sign up for the coaching club for just $29.95 per month which includes your newsletter at no extra cost.  Then you won’t be billed for the newsletter monthly.  No double $29.95 charges!

You will still receive the newsletter but you will get all the benefits of The Coaching Club as well.  Articles, archives, videos, courses, forms, everything that you need to further develop your real estate investment business.  You will find tutorials, webinars, trainings, Brain Pck a Pro archives, Palooza archives, and complete home study courses as well.  Everything you need is in one place!  But you have to join The Coaching Club to be a member AND receive your hard copy newsletter for just $29.95 per month.

That’s your financing tip of the month.  Be sure to head over to The Coaching Club to see where we are investing our money and how we are making 60-70% returns on our investments.  Right now you can borrow money at less than 5% interest and that is a smart financial move.

Unable to Get Mortgage Debt Relief – Be Ready for a Lawsuit

By Don Burnham

The United States is home to 94% of all the lawsuits in the world and 75% of the world’s attorneys. Very few of them are willing to help you get mortgage debt relief, or give you free financial advice, but many are willing to come after you for the default judgment..

Once you are served with a lawsuit, the clock starts ticking. You may be served by mail or in person and you have a very limited amount of time to answer the lawsuit. In most instances, the lawsuit will typically overstate the claim. For example, if you were involved in an automobile accident that caused $5,000 of damage to the other car and $5,000 of medical damages and you get sued, it will be for an amount much greater than $10,000.

They’re going to say things like, “I have headaches now and I get cranky with my kids.” You’re going to file a claim for much more than the actual damages. If they can also say they suffer from emotional distress, which means more money for them.

In most jurisdictions, you have 20 to 30 days to file your answer has to be before the court. And, it must be in the right format and have substance to it.

The discovery phase begins next and is the most expensive phase of a lawsuit. The discovery phase is where:

• Depositions are taken under oath
• Answers to interrogatories or questions are provided
• Copies of documents are provided
• Testimony is taken under oath on both sides
• Expert witnesses are brought into the process

Then, the plaintiff prepares their case against you. You will spend a lot of money defending yourself if your liability insurance policy includes ‘except’ or ‘but’ provisions. If you’re in that category, you are on your own, except for some partial coverage.

You’ll be faced with expenses and a lot of stress, because the real cost of the lawsuit isn’t just the money. It’s also the stress you experience during a process, which could last for two or three years.

Alternative Dispute Resolution

A method used to resolve legal complaints is called Alternative Dispute Resolution or ADR. All contracts should include an Alternative Dispute Resolution clause waiving rights to litigate and engaging in an Alternative Dispute Resolution.

Step 1, Conciliation

The first step is called conciliation, where you talk informally and see if you can work out the problem. If that doesn’t work out, you agree to enter into mediation where you hire a third party mediator.

The mediator will help both sides sit down and negotiate an arrangement in which both agree. The process is formalized with a written agreement. When the dispute is resolved, both parties are required to perform according to that agreement.

Step 2, Arbitration

If mediation doesn’t work, then arbitration is the next step. Arbitration is similar to court system process, except that it is much cheaper and much faster. The American Arbitration Association is a national organization that has arbitrators in every major city in the country.

Arbitration allows you to hire a third party. The third party can be one individual or a panel of third party participants to hear the complaint. Both sides give verbal testimony and present any evidence to the third party.

The rules of evidence in an arbitration setting are more relaxed and less formal than in the courtroom. Arbitration is usually completed within one to two days devoted to a hearing. The results are then usually determined within a few weeks instead of years.

If you have entered into a contract with this method of dispute resolution, you might spend a couple thousand dollars, instead of losing $100,000 in a lawsuit

Four Things to Understand About Prepayment Penalties

By John Steely

If you have a mortgage, of any type, many people will give you the advice to make extra payments on the mortgage in order to pay off the mortgage that much sooner. Indeed, depending on the interest rate of the mortgage, making extra payments has a return in line with the best money market accounts. And you get debt free that much sooner. Whether or not you should pay extra on your mortgage depends on many factors, and there are many articles written about doing that; one of the factors involved is whether there are prepayment penalties in your mortgage or not.

So, if you are going to make an informed decision about paying off your mortgage early, whether through extra payments or through refinancing your mortgage (which mortgage companies would love for you to do), you need to understand what prepayment penalties are, how they work, and why do they exist.

Types of Prepayment Penalties

If your mortgage has prepayment penalties, they are in place for a period of time at the beginning of the mortgage. That period of time is anywhere from two to five years; after that period is done, the penalty no longer applies. The reason the prepayment penalty only exists for the first few years of the mortgage is because the mortgage company has incurred certain expenses in making the mortgage, above and beyond what you are charged when the mortgage is closed. One example of such expenses is the commissions paid to the people involved in originating the mortgage. The mortgage company wants to make sure they get enough interest to cover such expenses, so if you pay off the mortgage too early, they will put a prepayment penalty to collect enough money to cover such expenses.

There are two types of prepayment penalties. The hard prepayment penalty is one that is charged regardless of how the loan is paid off. No matter what the circumstances, a hard prepayment penalty will be charged in addition to the monies needed to pay off the principal. The soft prepayment will not be charged under certain conditions; the two most common ways to avoid a soft prepayment penalty are either to sell the house or to refinance the mortgage through the original lender. If you simply put enough extra money into the mortgage or if you refinance through another company, the soft prepayment penalty will be charged.

How is the Penalty Calculated

Prepayment penalties will be triggered when one of two conditions is met; the mortgage must specify which conditions apply. The first type of penalty will is called a first dollar penalty, and it will be triggered whenever any extra money is applied to the principal. The usual calculation with this type of penalty is 80% of the interest owed on the extra money. Let us say you have a loan at 7% and you put an extra $100 on the principal one month. This type of penalty will charge you 80% of the 7% interest due on the extra $100, or $5.60. The exact details are in your mortgage. This penalty will be due every time you make extra payments on the principal.

The second type of penalty is called the 20% penalty. In this case, the penalty is triggered when you have paid an extra 20% of the principal. Again, let us say you have a mortgage of $150,000 at 7% interest. With this penalty, nothing will be charged until you have made extra payments totaling $30,000. When this amount is reached, you will be charged 6 months interest on 80% of the remaining principal. For example, let say in the above mortgage you made regular payments and reduced the principal down to $140,000, and then you came into an inheritance and put $30,000 on the loan, thus reducing the principal down to $110,000. Your penalty will be 6 months interest of 7% on $88,000, or $3,080. This penalty will be due the first time the trigger event occurs, but only the first time.

Many states put a cap on the size of the prepayment penalty. For example, my state, Virginia, has a cap of 2% of the owing principal as a penalty.

Why should I accept a Prepayment Penalty

Many people will tell you to never accept a mortgage with a prepayment penalty of any type; they will tell you it limits your options. However, the mortgage company will compensate you for a prepayment penalty in one of two ways; they will either reduce the interest rate of the mortgage by, say, half a percentage point, which could save you several thousand dollars over the life time of the mortgage, or they will reduce the loan points at the time of closing by one or two points, which again can save you a couple of thousand dollars.

The issue is where you see yourself heading. If you are planning on moving in the period covered by the prepayment penalty, then it may be worth your while to accept the higher rate or points so that you will not incur the penalty. If you are comfortable with the idea of not moving during the prepayment penalty period of two to five years, take the penalty and the lower rate and/or points.

Explicit Penalties Only

In either case, whether you have a mortgage now or not, the prepayment penalties must be spelled out in detail in the mortgage contract. If you are unsure, have a financial professional look at the mortgage; such a professional is trained at understanding this type of clause.

If someone comes to you with a deal, particularly a refinancing deal, make sure you know what you would have to pay before you accept the promised loan. You may be surprised to find all your supposed savings eaten up by these kinds of penalties and fees. A lower rate does not always make the best deal.

Best No Money Down Ways to Buy Real Estate

By Scott Taylor

If you’ve been reading articles or books on Creative Real Estate Investing, you’ve doubtless heard many, many different ways to buy houses, condos, townhouse and any other real estate you can think of. These include:

Lease/Options (more correctly Sandwich Lease / Options)
Master Lease / Option for multi-unit properties
Contract for Deed (A.K.A. All Inclusive Trust Deed, or Installment Land Contract)
Subject – To
Owner Carry
Wraparound Mortgage
Traditional Purchase

Confused yet? I know that the first time I heard many of these terms I certainly was. So let’s break these down briefly, and I’ll explain what I like and don’t like about them.

Sandwich Lease / Option

This is where you (rather your company) signs a lease with an option to purchase a property. The agreement gives you the right to sublease to another. You’re the middleman leasing for a low monthly cost with a low purchase price and a long term from the homeowner, then you lease it back out for just above market rent and a future appreciated price to a potential buyer. You make monthly cash flow, and when (IF) they buy you get the difference in price. You also get a decent upfront option payment that you get to keep if your tenant / buyer moves out.

Easy, huh? Well, yes and no. This is probably the easiest way of presenting a creative purchase to the homeowner, and the easiest to explain. However, sometimes the legal aspects of a lease / option are shaky, and if you have a homeowner that won’t work with you, you could be in for issues. The key here is you have to protect yourself with the right agreements and escrow documents.

The other side is you have to know your landlord / tenant laws and make sure you follow them and that your contracts follow them. You could be in trouble if you don’t.

Given the warnings above, I’d recommend this method over anything else to someone just getting started. While there is a bit of paperwork to use to protect yourself, it’s the easiest to manage. And there can be great profits in lease / options.

Master Lease / Option

Same as the Lease / Option but with a master lease agreement that lets you rent out individual units in a multi-unit apartment building.

Contract for Deed

This is known by different names in different states. Here in Colorado, it’s an Installment Land Contract. Other places it’s an All-Inclusive Trust Deed, or a Contract for Deed. All the same, just different names.

A Contract for Deed is just what the name says. It’s a contract for the deed to a property. The contract usually involves making payments to the owner and after a period of time you guarantee to purchase the property. Whereas a lease / option gives you the right, but not the obligation to purchase, a Contract for Deed obligates you to buy.

This one’s a bit more complicated, but essentially the same as the Lease / Option. You buy it on the contract, then rent it out to a Tenant / Buyer. They usually won’t buy so you get their monthly rent, and keep the option deposit if they don’t buy.

This is my second choice for people just beginning. It’s easy to explain to the homeowner, it makes them feel like they still have some control, and they like the sound of it. Also, most title companies understand the Contract for Deed, and will do the closing for you.

Subject To

This is a much more difficult deal to get. This is the one deal where the homeowner will tell you how to buy instead of the other way around. I never have signed up a Subject-To by suggesting it. The homeowner has ALWAYS told me “just take the house – I’ll sign it over to you”.

It’s honestly sad to see people so desperate, but the sense of relief you see in their eyes when you say “okay” is phenomenal. Some people think that real estate investors are sharks, but I’ve never hugged a shark after they’ve had their way with me. I have, however, received a hug or a hearty handshake almost every time I’ve taken a house over subject-to. People are in such a bind that having someone help them out really does wonders for them.

A subject-to is pretty basic on the surface. A homeowner in financial trouble signs a deed to his or her house over to you. The loan stays in their name, and you make the payments. Under the hood, though, there are a number of things you need to do to make sure you’re protected. Putting the property in a land trust, signing the deed to the land trust, then naming your company as the beneficiary is just one of the things you need to do to protect yourself. Before you do this type of deal, make sure you have the right education and paperwork.

This is by far my favorite way to sign up houses. But it’s not for beginners. I recommend this after you’ve been investing for a year or two. Not because of the legal issues with this, but because I truly believe that you’re very obligated to follow through on this deal. If it goes sour, you’re stuck. Maybe not legally, but morally and ethically. You have to make the payments no matter what.

Owner Carry

Yet another great way to buy. However there’s one drawback – the owner almost always wants a down payment. If you’ve been investing for awhile and have the money that’s great, but if you’re just starting out and you don’t it’s probably not for you.

This one is pretty self-explanatory. You buy the house and the owner carries a mortgage. Generally this is a property that has no existing mortgage, so the owner is allowed to write you a mortgage without worrying about the due on sale clause.

Again, this is a great way to buy a property as the mortgage doesn’t show up on your credit. But you need to have the cash for the down payment.

Wraparound Mortgage

This is basically an Owner-Carry, but there is an existing mortgage on the property. The owner “wraps” a new mortgage around that and sells the house to you with the new mortgage. The only drawback of this is you have to make sure to write your paperwork so that the due on sale clause isn’t triggered. You can do this similar to the Subject-to, by putting it into a Land Trust.

Traditional Purchase

Please, Please, PLEASE don’t buy houses retail unless it’s a really great, smokin’ hot deal! Please?

Here’s how I like to buy traditionally. Buy a wreck of a house from a bank, from HUD, or from a wholesaler. Make sure that the price of the house, plus all the costs fixing it up don’t go over 80% of the fixed up value of the house.

Buy the house, fix it up, then refinance it, pull all the money out that you put in buying it and fixing it, then rent it out or do a rent-to-own. When you’ve refinance and pulled your money out, do it again. A good investor can do four or more houses a year this way. The only fly in the ointment here is that eventually the mortgage companies will cut you off and you won’t be able to buy any more. Then you’ll have to resort to the above methods. But by then you should have enough cash flow that you can pretty much sit on your butt all day if you’d like.

So to sum up:

As you’re just getting started, concentrate on Lease / Options first. Once you’ve gotten your feet wet and understand what a good deal vs. a bad deal is, move on to Contract for Deed, then finally to Subject-To. Throw in some Owner Carry and Traditional purchases and in ten years you can retire and NEVER have to worry about money again.

Scott Taylor is a successful Real Estate Investor, trainer and Web Entrepreneur. He has taught hundreds of students to become wealthy through Real Estate. Mr. Taylor also runs successful website businesses, and reviews Internet businesses.

In times like these, when the economic future is so uncertain, let’s take a moment to revisit a lending vehicle that most people aren’t thinking about at the moment, the “wrap.” I know, I know, you’re wondering how this debt vehicle would be used in a real estate market such as this. Well, why not take a look at the function and structure of this type of mortgage and come to your own conclusions.

A wraparound mortgage (also known as an all-inclusive mortgage or trust deed, commonly called a “wrap”) is defined as “a mortgage that secures a debt and includes the balance due under an existing first mortgage.” This type of mortgage will “wrap around” the current debt and include any new funds advanced.

Under the terms of a wrap, the borrower makes one monthly payment, which includes the payment due on the first mortgage and the principal and interest due on the “new money” advanced. The wrap holder then makes the payment due on the existing first mortgage. By using this method, the borrower can’t default on the first mortgage. If the borrower fails to make a payment, the wrap holder can continue to pay the existing first mortgage debt to protect its interests, while pursuing a foreclosure on the wrap.

When we talk about making a mortgage that will be in second position to an existing first mortgage, it raises the question of risk. If the borrower defaults on the payment of the first mortgage, the second mortgagee (lender) may not know about it.

Any unpaid monthly payments, late charges, penalties, property taxes, insurance and legal costs can add up quickly. If this leads to a foreclosure action, these costs are paid before the second mortgage receives anything. The second mortgage is at risk of being foreclosed out if the property doesn’t sell at auction for enough to cover both loans and all the costs. However, when using the wraparound mortgage the payment on the first mortgage is included in the monthly payment from the borrower.

A default cannot happen on the first mortgage without the wrap holder’s knowledge. It is an excellent instrument to use for mitigating risk when in second position, and, it can generate returns to the wrap holder that are much higher than normal.

All your mortgage needs when buying new homes

Buying a new house is always the dream of every one. You opt for mortgage loans when you don’t have the full cash for buying the home.

Buying a new home is always the dream of every one. You opt for mortgage loans when you don’t have the full cash for buying the home. There are a number of mortgage lenders to offer excellent service to satisfy all your mortgage needs. Special mortgage programs are also offered for assisting home buyers.

If you are familiar with at least some of the mortgage loan and contract terminologies, that can significantly aid your home buying process. If you need a mortgage to buy a new home, first you need to know about the different types of Mortgage Loans available. Conventional and government loans are the two main categories of mortgage programs. Each mortgage programs can be classified as fixed rate loans, adjustable rate loans and hybrid loans. Since a variety of different loan programs are available, it is important to choose the exact type of loan that will best suit your needs based on the amount of monthly payment you can afford. You can deal with all your mortgage needs effectively using the following tips in order to buy your new dream home. 

If you plan for getting mortgage for buying a new home, you must first order your credit report from credit reporting agencies and check it for errors. Then you must track the mortgage market and interest rate fluctuations. When the mortgage market and interest rate fluctuations are favorable, choose a mortgage plan that best suits your needs based on the terms of the mortgage such as the type of the mortgage, interest rate, prepayment penalties, high or low down-payment, lock-in period, payment schedule, mortgage insurance requirements, and many other features related to mortgage needs. You must determine the type of mortgage you want to obtain based on also the total price of your new home and the down payment that fits your budget. Once you choose a certain mortgage program, you can start comparing interest rates of the same mortgage program provided by different lenders. Then you can decide the best mortgage lender for your situation.
 
Once you have chosen a certain mortgage lender, ask the mortgage lender to specify the essential documents that are required to provide the approval process. Make sure whether the mortgage loan application and the lock-in fees are refundable in case if your mortgage loan application gets rejected. Once your loan application gets sanctioned, you can continue with the further process of getting your loan amount for buying your home. Once you get the Loan Approval Certificate, you must give details of the home you wish to buy and pay the booking deposit to your mortgage provider in order to get a Formal Loan Offer. You must thoroughly go through the loan offer along with your broker & solicitor. Once all the conditions given in the loan offer are satisfied , you have to sign contracts after 3-4 weeks. Finally your loan amount will be released from the mortgage provider or lender to your solicitor.

Mortgages are always available for all financial situations. You can choose the one that best fits your needs just by a little shopping and research. You can also get enough information from mortgage agents or brokers. The builder of the home you are willing to buy may also be able to recommend some mortgage companies.

ABOUT THE AUTHOR

Sharonsamraj is an eminent analyst and writer in real estate mortgage related topics. He has authored many books on mortgage guide for Kelowna mortgage broker and Vernon mortgage brokers. Find more packages at www.casanoblemortgages.com.

First Time Homebuyers Profit From the Falling Market

Has the housing market bottomed out? Is it possible that home prices are going to continue falling? Will mortgage rates continue to go down? Will they go up? Aspiring homeowners most likely wonder what the market future holds and whether or not they should buy now or wait a month or longer. It is tempting to jump right in and make a bid on that beautiful – foreclosed – home down the block, but is this really the best time or will the time get even better in a short period of time?

At the heart of this question is of course the other question: is there a bottom past which mortgage rates will not drop? If so, has this bottom yet been reached or is it still being approached? The secondary question that requires answering is whether or not home prices have dropped to their absolute bottom at this time. It is noteworthy that while speculation is running rampant, not even market analysts and those usually not shy to give their opinions about the housing bubble are markedly silent.

What holds true, however, are the facts. Mortgage rates are extremely low, and housing prices followed suit. If ever there was a time for new homebuyers to enter the market it is now. With the governmental incentives for first time homebuyers, the deal is sweetened even further and there truly is no time like the present to buy that first primary residence. At the same time, with home prices further falling, there is the question if it is advisable to perhaps wait out the market to see if another drop in housing prices leads to a further lowering of the interest rates and maybe even further incentives.

Savvy would be homeowners are counseled to research the home prices in the neighborhood into which they are hoping to buy into and see if the current prices are at – or close to – historic values. If so, it is a good idea to take a chance on the market. Moreover, the mortgage rate is unlikely to fall significantly more, and thus now is as good a time as any to get into the market. By the same token, since banks now require a substantial down payment, it is unlikely to be caught up in any further market correction if home prices continue to fall.

Of course, new homebuyers need to come to terms with the tightening mortgage lending practices. For example, zero down loans and stated income mortgages are now virtually unheard of. As a matter of fact, it is now harder than ever to qualify for a new home loan. In this manner those with adverse debt to income ratios and also insufficient income will be kept out of the market, no matter how desperate sellers currently might be. This is also pointing to another interesting bit of market wisdom: if you have good credit and all your ducks in a row, now is a good time to go ahead and make that home purchase. There is no guarantee that in a month from now you will still qualify for a home loan.

In order to compare the lowest mortgage rates, you can visit our site, www.Lender411.com.

ABOUT THE AUTHOR

Krista Scruggs is an article contributor to Lender411.com. Whether you are looking for fixed mortgage rates, variable adjustable mortgage rates (ARM), jumbo loans,interest only or even specialized mortgages such as bad credit mortgage or reverse mortgages, we will match you with up to 4 qualified lenders with 4 mortgage quotes. and any other unique situation you might be in), we will match you up with the right compan

Obama’s Stimulus Plan: We Need Mandates to Spur Demand

By Butch Grimes

For those 9 million Americans classified as struggling homeowners the idea that $275 billion is being pumped into the housing sector through President Obama’s recently unveiled stimulus plan gives an initial ray of hope. But from where I sit as a long time realtor, business owner and community activist, it looks like the right hand doesn’t know what the left hand is doing.

Here are the details. Of that $275 billion being pumped into the economy the expectation is that about 5 million homeowners who have little equity or are upside down in their mortgages will be able to refinance through Fannie Mae or Freddie Mac. $200 billion has been allocated to back these entities. The other $75 billion is supposed to encourage lenders to make loan term modifications for those in foreclosure, or who are at risk of going into foreclosure. So what’s missing?

Missing: No Cohesive Plan, No Mandate for Industry

Basically, there are 3 things missing here.

1) It’s not enough.

Ok- I understand that some of the money needs to go to drive jobs in other sectors of the economy. But when it’s going to bailouts that fund already failing car manufacturers, that just takes money away from where it would be most effective. There are a lot of folks angry at the idea of helping out an individual homeowner who got in over his head. Yet we’re bailing out CEOs of major businesses instead of funneling that money to keep the housing economy viable.

2) No mandates for Creditors

What good will any of this do if qualified people still can’t get home loans? Every day I see banks and creditors refusing to make loans or modify loans. I see people with high credit scores waiting months for loans. This hurts us all!

What about the whole credit rating system? Why don’t we hear anything about how Equifax, Experian, Transunion are impacting this crisis? There should be mandates that require these organizations to report credit accurately. Where do they play in the scheme of things? I’ve heard that there is a new scoring model coming out for FICO. No one understood the rules on the last one. Is this any different?

Frankly, until there are mandates to make adjustments the banks and creditors and credit raters aren’t going to do it. More houses will sit empty and more folks will continue to lose their homes. It’s a vicious circle.

3) No Cohesive Plan

I heard HUD secretary Shaun Donovan the other night explaining how the stimulus plan will help bring some “underwater” homeowner payments down to 31% of income, if they are backed by Fannie Mae or Freddie Mac. What I didn’t hear was how the mortgage insurers play into this whole deal. That’s why I feel that this whole plan is so one sided. Incentives are just a drop in the bucket.

From Where I Sit

Here’s my unique perspective. I host a real estate talk show at http://www.WeTalkRealEstate.com and sponsor a social network for real estate professionals at http://www.WeTalk247.com . Everyday I hear from the people most impacted by this whole situation. The callers to my show and podcast are homeowners, people facing foreclosure, and realtors all trying to make it through this crisis. Some of Obama’s stimulus incentives will help some of these folks. What it won’t do is enable many who want to buy to do so.

Without a cohesive plan that includes the mortgage insurers, bankers, and creditors, credit scoring organizations and requires some sort of mandate on loan modifications and lending rates it just won’t be a long term solution. The housing portion of the economic stimulus plan just doesn’t subsidize interest rate reductions for borrowers in a way that will spur demand and recreate a housing economy that will benefit everyone in the long run.