Saturday, June 6, 2009
Friday, June 5, 2009
Lenders Plan to Ease Home Repossessions Ahead of Boom in Mortgage Defaults
As they brace themselves for a rise in defaults, mortgage lenders have published their plans to minimise the number of people who have their homes repossessed. The Council of Mortgage Lenders (CML) said that while mortgage arrears and repossessions were expected to remain low, the UK's deteriorating economic outlook would lead to more homeowners finding themselves in difficulties.
The CML's initiative aims to make sure that homeowners who are unable to maintain their mortgage repayments will only lose their home once all other measures have failed. Mortgage lenders are already required by the Financial Services Authority (FSA) to have policies for arrears management which aim to avoid repossessions, except where there is no alternative. But there is no one, standard approach, and repossession policies differ between lenders.
In a letter to Alistair Darling the Chancellor, the CML said its members had signed up to four measures to help keep repossessions to a minimum.
Lenders have agreed to analyse their existing arrears management policies and improve them to bring them in line with new industry guidance that have been issued by the CML. Borrowers who fall behind with repayments will also be provided with information explaining their lenders' arrears management process, so that they can understand what to expect and how they will be treated.
Lenders will also adopt what is called the "pre-action protocol" which sets out the various steps the lender must go through before taking an arrears case to court in order to ensure court action is a last resort.
Finally, building societies and banks also have to be proactive in helping people to plan for potentially higher mortgage repayments when their current deal ends. The Council wants lenders to communicate with borrowers nearing the end of their discounted deal or fixed rate in good time and persuade them to get in touch with the lender if they believe they may have difficulty meeting the higher repayments.
The Director General at the CML said: 'We continue to anticipate that the level of mortgage arrears and possessions will remain low, as originally forecasted. With the economy worsening and an incomplete safety net for mortgage borrowers, the CML cannot be complacent about the outlook and the challenges facing lenders, borrowers and public policy makers alike. We continue to work closely with Government Ministers we and look forward to a clear statement of the Government's own position on a safety net for borrowers.' He also added that the CML also felt that the Government should urgently improve the support for homeowners who suffer a short-term loss of income.
There are many reasons for being in debt maybe you've lost your job and now you can't pay your bills. The debts are accumulating and you are worried.
The CML's initiative aims to make sure that homeowners who are unable to maintain their mortgage repayments will only lose their home once all other measures have failed. Mortgage lenders are already required by the Financial Services Authority (FSA) to have policies for arrears management which aim to avoid repossessions, except where there is no alternative. But there is no one, standard approach, and repossession policies differ between lenders.
In a letter to Alistair Darling the Chancellor, the CML said its members had signed up to four measures to help keep repossessions to a minimum.
Lenders have agreed to analyse their existing arrears management policies and improve them to bring them in line with new industry guidance that have been issued by the CML. Borrowers who fall behind with repayments will also be provided with information explaining their lenders' arrears management process, so that they can understand what to expect and how they will be treated.
Lenders will also adopt what is called the "pre-action protocol" which sets out the various steps the lender must go through before taking an arrears case to court in order to ensure court action is a last resort.
Finally, building societies and banks also have to be proactive in helping people to plan for potentially higher mortgage repayments when their current deal ends. The Council wants lenders to communicate with borrowers nearing the end of their discounted deal or fixed rate in good time and persuade them to get in touch with the lender if they believe they may have difficulty meeting the higher repayments.
The Director General at the CML said: 'We continue to anticipate that the level of mortgage arrears and possessions will remain low, as originally forecasted. With the economy worsening and an incomplete safety net for mortgage borrowers, the CML cannot be complacent about the outlook and the challenges facing lenders, borrowers and public policy makers alike. We continue to work closely with Government Ministers we and look forward to a clear statement of the Government's own position on a safety net for borrowers.' He also added that the CML also felt that the Government should urgently improve the support for homeowners who suffer a short-term loss of income.
There are many reasons for being in debt maybe you've lost your job and now you can't pay your bills. The debts are accumulating and you are worried.
Mortgage Lenders - What Can They Offer
The UK mortgage market is one of the most diverse mortgage markets in the world. The mortgage lenders have many diverse schemes available, each one has a unique selling point to create their own place in the market. Some of the big mortgage lenders have gone for market share, they offer a low rate and hoover up all the average deals. But these deals are restrictive they do not cater for any thing that is out of the ordinary.
You may be looking to build your own home and require staged payments, most mortgage lenders will not like this set up, but with the UK having such a wide choice it is possible to find mortgage lenders that specialise in the self build market. They will be able to give you help and advice that you may not receive from a big high street mortgage lender.
Some people have properties that are not made in the traditional way and will find it difficult to raise the finance to purchase or remortgage. There are mortgage lenders in the UK who are considered niche lenders and while they may not offer a market leading rate. They will have advisors on hand who have expert knowledge of all the different materials that are used to build homes these days. Many council houses have been built with non-standard materials, which will cause problems for some mortgage lenders.
A good point of call to find a new mortgage lender is a mortgage broker, they will be able to find a mortgage lender that best suites your demands and needs. They should be your first point of call if you are looking to purchase or remortgage a property that is not of standard construction or design.
You may be looking to build your own home and require staged payments, most mortgage lenders will not like this set up, but with the UK having such a wide choice it is possible to find mortgage lenders that specialise in the self build market. They will be able to give you help and advice that you may not receive from a big high street mortgage lender.
Some people have properties that are not made in the traditional way and will find it difficult to raise the finance to purchase or remortgage. There are mortgage lenders in the UK who are considered niche lenders and while they may not offer a market leading rate. They will have advisors on hand who have expert knowledge of all the different materials that are used to build homes these days. Many council houses have been built with non-standard materials, which will cause problems for some mortgage lenders.
A good point of call to find a new mortgage lender is a mortgage broker, they will be able to find a mortgage lender that best suites your demands and needs. They should be your first point of call if you are looking to purchase or remortgage a property that is not of standard construction or design.
Your Mortgage Lender is Not Your Financial Advisor
"I don't know how much I can afford to spend on a house, so I'm going to pre-approved by a mortgage lender. They'll be able to tell me how much I can afford."
I hear first-time home buyers say this kind of thing all the time, and it always disturbs me. It's indicative of a false and dangerous notion that is prevalent among U.S. home buyers -- the idea that a bank can tell you what you can afford. This notion is dead wrong, and it's also my motivation for writing this article.
If you rely on a mortgage company to determine your home buying budget, you may end up spending a lot more on a house than you can afford. "How is this possible?" people often ask. "Why would a bank give me more money than I could afford to pay back?" I'll tell you why, and I'll also tell you how to avoid such mistakes when getting a mortgage loan.
How Much House Can You Afford?
You are the only person who can determine what you can afford to pay each month, in the form of a mortgage payment. A lender cannot tell you this. They can only approve you for a certain size of loan -- but that's it. Their responsibility stops there. The lender is not your financial advisor or your friend. They are in the business of making money by charging interest. Period. End of story.
So before you start talking to mortgage companies ... before you try to get pre-approved for a home loan ... and before you start the house hunting process ... you need to determine your monthly budget and maximum spending limits. Many home buyers skip this step altogether, relying on the lender to do it for them. That's why we have so many home foreclosures in the Untied States -- people set their common sense aside and rely too heavily on the judgment of mortgage lenders. Big mistake.
Here are the steps you should take before you start talking to lenders:
Add up your monthly expenses and write that number down on a piece of paper. You can exclude your rent payments, because those will go away when you buy a house.
In your expenses tally, be sure to include everything you spend money on each month. Car payment and insurance, other insurance premiums, credit card payments, groceries, savings, entertainment and recreational expenses, etc. Everything but your rent.
Next, write down your net monthly income. This is your "take-home" pay, after taxes are taken out.
Subtract your monthly expenses from your monthly net income. This is the amount you have to put toward a mortgage payment each month. Your monthly payments on a home loan should not exceed this amount. If they do, you are buying too much house!
Now that you have a firm budget established, you can get pre-approved by a lender to see what they're willing to lend you.
Here's the bottom line. It's possible to get approved for a mortgage that's too big for you. Banks do not care about affordability as much as they once did, because they know they can sell the loan into the secondary mortgage market (through Freddie Mac). So if they give you a loan that's too big for you, and you end up defaulting on that loan down the road, it's not their problem.
So say it with me: "The mortgage lender is not my financial advisor. They are not looking out for my best interest. They are in the business of making money -- period. I need to establish my own monthly budget and spending limits, before I start talking to lenders."
Repeat this mantra as you enter the home buying process, and you'll be on the path to success. If you ignore this mantra, you could become yet another foreclosure statistic down the road.
Brandon Cornett is the owner of Cornett Communications, an Internet publishing company focused on the real estate industry. His website offers a wealth of home load advice and other resources for home buyers.
No Doc Lenders - Where to Get Your Mortgage From!
Are you looking for no doc lenders that can help you get the mortgage you need? Do you want to get your mortgage without much trouble and without proving much of anything? There are many ways you can get the mortgage you need and many lenders out there that will allow you to get what you need. Here are the things you need to know about this type of lender.
First, most banks and most lenders do have a program that does not force you to prove your income. However, you will have to know that your rate and the fees for this type of loan are probably going to be higher than if you can qualify for a regular mortgage. This might be the only way you can get the mortgage you need for your home.
Second, the best person for the program is the self employed. They should be searching for no doc lenders that will allow you to get the mortgage you need. This program was made for those that own a business because they typically cannot prove their real income from their taxes or from their business records.
Last, those that are tipped employees or work for cash are also those that need no doc lenders. These are the other group of people that struggle to prove their income. They are those that do not claim all their income and will not be able to get the mortgage they need because of this problem. They will not have enough proof on their taxes or paycheck stubs.
First, most banks and most lenders do have a program that does not force you to prove your income. However, you will have to know that your rate and the fees for this type of loan are probably going to be higher than if you can qualify for a regular mortgage. This might be the only way you can get the mortgage you need for your home.
Second, the best person for the program is the self employed. They should be searching for no doc lenders that will allow you to get the mortgage you need. This program was made for those that own a business because they typically cannot prove their real income from their taxes or from their business records.
Last, those that are tipped employees or work for cash are also those that need no doc lenders. These are the other group of people that struggle to prove their income. They are those that do not claim all their income and will not be able to get the mortgage they need because of this problem. They will not have enough proof on their taxes or paycheck stubs.
Avoid Paying to Much For a Home Mortgage Refinance
Getting a better deal on your home loan through refinancing or modification can save you a lot of money every month. However, there are a few things to be on the lookout for in order to avoid paying too much when you decide to refinance or modify your home loan. So, here I have a few easy tips to help you get the best refinance deal possible.
The majority of homeowners have never heard of the term "Yield Spread Premium" (YSP) before. Some have even been paying it and are unaware that it is included in their monthly payments. This YSP is the markup percentage that the mortgage lender adds onto your interest rate in order to receive commission from their lender. Commissions as high as 4% of your loans total amount are sometimes occurring and the result is a much higher interest rate than you should have gotten that lasts for the entire length of your home loan.
So why would a mortgage lender add a Yield Spread Premium into your home loan? The mortgage lender basically receives a bonus for every .25% of interest they are able to tack on to your home loan. The information regarding this is buried in the fine print on one of the hundreds of pages of documents and can be very hard to find.
A homeowner who is informed as to what a Yield Spread Premium is can usually avoid having to pay the ridiculous markup by negotiating the fact with any potential mortgage lender prior to refinancing a home mortgage. There is already fees and closing costs associated with refinancing a home loan, so the YSP is not really necessary in order for the mortgage lender to turn a profit. This can actually be taken as a predatory loan practice as the lender is taking advantage of you for their own additional commissions, without informing you.
Home refinancing can save you thousands or if it is done the wrong way cost you thousands. Greedy mortgage lenders will try to suck you dry if you let them.
The majority of homeowners have never heard of the term "Yield Spread Premium" (YSP) before. Some have even been paying it and are unaware that it is included in their monthly payments. This YSP is the markup percentage that the mortgage lender adds onto your interest rate in order to receive commission from their lender. Commissions as high as 4% of your loans total amount are sometimes occurring and the result is a much higher interest rate than you should have gotten that lasts for the entire length of your home loan.
So why would a mortgage lender add a Yield Spread Premium into your home loan? The mortgage lender basically receives a bonus for every .25% of interest they are able to tack on to your home loan. The information regarding this is buried in the fine print on one of the hundreds of pages of documents and can be very hard to find.
A homeowner who is informed as to what a Yield Spread Premium is can usually avoid having to pay the ridiculous markup by negotiating the fact with any potential mortgage lender prior to refinancing a home mortgage. There is already fees and closing costs associated with refinancing a home loan, so the YSP is not really necessary in order for the mortgage lender to turn a profit. This can actually be taken as a predatory loan practice as the lender is taking advantage of you for their own additional commissions, without informing you.
Home refinancing can save you thousands or if it is done the wrong way cost you thousands. Greedy mortgage lenders will try to suck you dry if you let them.
Subscribe to:
Posts (Atom)
