MORTGAGE SECRETS EXPOSED!
MORTGAGE LOAN MODIFICATION GUIDED:
Privileged/Paid Loan Modification Guide Info For Getting a Loan Modification &The Necessary Documents:
Lowering you mortgage payments can be one of the greatest financial challenges anyone can face today. Follow these easy steps and your mortgage payments can be lowered. It takes a certain set of skills and persistence to be able to accomplish this task. Lowering your mortgage is the one thing that will make you feel really good once you have lowered it, and your overall monthly obligations has dropped once and for all; and lowered permanently! The information below is powerful and informative, and it will give you an overview of the process and steps involved in making this a reality.
Bank Loan modifications are being done at an increasing rate to try to combat the rising housing default rate in this country. Homeowners that have gone through some terrible losses in this economy from reduction in their average household income or even a complete loss of their jobs may be able to benefit. Our economy is still handling the influx of high foreclosures and a high rate of unemployment, still approaching 10%. The simple fact is, if a homeowners cannot work and make a living then they can not support making a large house payment, and they may not be able to meet their other financial obligations. We still have a way to go before we start seeing the housing prices begin to bounce back to the levels of the pre-2006 appreciation values. Big companies will have to get off the side lines and start hiring again before we see any real improvement, and that somewhat tied to governmental policies. Once confidence in the market returns so will low unemployment, and a rebound in home prices once again.
Banks and mortgage companies are doing primarily bank loan modifications to offset the rising mortgage default rate. Banks are being subsidized by government to lower the mortgage balances and payment amounts on mortgage loans to help reduce foreclosures. With foreclosure increasing it will continue to drop the median home price until the market bottoms out. Some experts believe we have hit the bottom of housing crisis, while other disagree. The economy will not recover until companies start hiring once again and unemployment rates are back down to an acceptable level of around 4-6%. Think about it, if you can not make a living you can not make your payments on your obligations. So we have mortgage companies and banks trying to offset foreclosures by offering mortgage loan modifications to help out. There are people who believe that government involvement will only extend the housing crisis, and not allow the market to correct itself as it is known for doing well. Others think that the market will correct itself with government involvement and keep a cap on our unemployment rate. What side do you stand on. Regardless, I want to discuss the available help that is out there and how to get it for you and your family.
WHAT TO DO NEXT TO MODIFY YOUR MORTGAGE
Anyone facing an imminent danger of job loss with in the next 6 months should be willing to check with their mortgage company to see what assistance may be provided to them for free. There are several different loan modification programs available to a homeowner in need of assistance. The most common loan modification program is the Home Affordable Modification Program(HAMP). There is also a HAMP II which builds on the original HAMP. These programs are subsidized by the Federal Government to assist homeowners in lowering their mortgage payments to as low as 1%. There are programs that have adjustable rate, fixed rate, principal balance reduction, in some cases 40 yr mortgage loan modification program. So there are some innovative programs that are continuously hitting the market and lender are choosing whether to participate in them or not. Most lenders are participating in them because of the financial benefits to them and their shareholders.
If you are facing the possibility of loosing your job and in turn your home in the near future, do not hesitate to call your lender up and ask them about the specific programs they are participating in or all the programs they might consider you for. As I said most lender/banks will participate because the government will compensate them well to modify your home loan. Your lender will review your loan based on what you owe, your job stability, your income, the appraised property value of your home, the location, among other specifics pertaining to your loan. They will use these figures to see if they are able to lower your mortgage payments. If they are able to lower your payments you will be notified and will be asked to provide additional documents such as pay stubs, income tax returns, hardship affidavit, 4506-T(which is a tax release form for your prior years taxes), utility bill, bank statement, profit and loss statement(if you are self-employed), proof of any award letters for disability, unemployment, or Social Security Income. Once you have gathered your necessary documents, you will should keep a copy for your records and send the rest of the documents to your mortgage company. Your lender needs these documents to complete your mortgage loan modification process. If you are unable to provide your required documents in the requested time, call your lender and let them know of your delay, and advise them you are sending the documents as soon as you are able to do so. In some cases if you are unable to get a document they will allow you to send another document in its place, or move on without that document, depending on what the document is. If you do not call you might find yourself getting a denial letter in the mail. If you are denied you may re-apply as many times as you would like to, but re-applying can waste a lot of yours and your lenders time when you could do it right the first time. The key to getting a mortgage loan modification is patiently following up on your progress by calling in at least weekly to see what is missing, if anything, and providing the document once you discover what is missing. That is main advice for success when it comes to a getting a mortgage loan modification once you qualify. I have personally overseen many loan modification programs with huge success rates. Please do not make it any more complicated because it is not.
Make sure you provide all of the documents in a full and complete manner as requested. I have dealt with many homeowners that have been denied multiple times for something as simple as not signing a form or not filling out the date. Do not let that be you, because the sooner you completed your documents the sooner you could be on your way to a lower house payment that may be permanent. Once you have completed the requested documents as needed then do your follow up. You should be calling your mortgage company about once a week to see what the progress is looking like. Never, never, wait around for weeks or months without checking in with your lender to see if there is anything missing or incomplete in your loan modification documents. If you are missing anything your can quickly submit it and avoid a denial letter going out to you. A denial letter will only stress you out, and it may cause you to give up on a much lower house payment dream when that does not have to be the case. Always follow up, I can not stress this enough just based on experience; follow up, follow up and follow up some more.
In addition to the required documents for a modification, it is advisable to include a well written hardship letter with your loan modification documents. Please see examples of how to write a convincing loan modification letter, and get some of your loan modification documents at http://www.mortgagecrisistips.com/Hardship-Letter-Info.html for free. Also, some of your modification documents are to the left side, the RMA and the 4506-T form, just click and print. Follow up regularly and be vigilant, yet realistic. Remember, following up regularly(weekly)can mean the difference between being approved or being denied; it keeps you once step ahead of the others.
Now if you have supplied all that is needed and still end up getting denied due to something out of your control, at least you tried and gave it your best shot, that is a different case than just not responding at all when something is needed. In such a case if your lender reviews you for a mortgage loan modification and denies you, there are alternative solutions. There are servicers/investors with loan modification programs that may qualify for if you are denied for the HAMP, which is the government program passed under President Obama's Making Home Affordable Plan. Many lenders will automatically submit you for these types of loan modification programs if you are denied for the government program(HAMP). These loan modifications are called custom modification, the ones made up entirely by your mortgage company that is often similar to the HAMP. You might see a letter indication you did not get the HAMP but you are being review for the in house program, or the servicer/investor modification program. Folks there are not a whole lot of differences between the 2 modification programs. In fact, the in house program that your lender might have largely imitates the government program(HAMP). The only real difference is in one specific thing. The government program allows for a $1,000/year principal loan reduction amount for up to 5 years of your unpaid principal balance or mortgage balance if you stay current with your mortgage payments, while your mortgage company in house program does not have that specific benefit. However, everything else is pretty much the same. The main goal of the program is to lower your house payments permanently. The programs will also pick up any unpaid escrow balances, whether it is property insurance or taxes and put it at the end of the loan. Your lender will drop the late fees out of your balance when doing a loan modification, so you don't have to worry about potentially adding, in some cases thousands of dollars in late fees in the program; it will be forgiven. A modification is not like a refinance, and does not have the fees associated with a refinance. So in a sense that is a plus!
There is one thing you must be aware of in the case where you might not be able to get a modification. You could be denied, that is very possible in some cases such as your past due balance is too negative. For example, you might be 1 year past due and owe $70,000 in back mortgage payments, late fee, and or escrow and your lender is just not able to modify your loan and lower your payments. In such a case talk to your lender and see if there is anything they might be able to do to keep the home. If there is nothing they can do as far as a modification. You are still able to do other options such as a short sale, repayment plan, a settlement, or a Deed-in-lieu of foreclosure so that your property does not go up for a foreclosure sale. Doing any of these options will save you from a foreclosure if you are able to do it in time before the foreclosure sale, or ask your lender to extend the sale date to allow you time to complete one of the above options if you did your best and the loan modification failed. Do not get me wrong a loan modification is great especially if you are able to cut your payment in about ½, and get a principal mortgage reduction, but if you are not so lucky that does not mean it the end for you. Look at the other options and try to work something out as soon as you can if you are denied or denied multiple times for a modification. There is another "so called" new loan modification program that may allow you to modify if all else fails, it's called the "Hardest Hit Program" which was designed to help families that are hardest hit by the current economic climate we are in. If you are financially devastated and need help with getting help from this program contact your local or state's government office. The funds for this program has been allocated to your state, start with your local governmental office and go all the way up to the governors office if you need to, and work you way to financial benefits with this program if all else fails.
ONCE YOUR MORTGAGE IS MODIFIED
Most loan modification companies start you off with a trial mortgage loan modification once you are approved for the initial process. Please make sure you complete the trial period successfully by providing whatever is being requested in a timely manner. "The rule of thumb" is to treat the trial loan modification period just the same way you would treat the loan modification application review period. What I mean is for you to follow up with your lender about any possible form they might still need. I have seen countless homeowners denied while in their trial mortgage loan modification period because they were still missing their required documents, missing their trial payment, not providing proof of property insurance, among other unexpected reasons. Not because you get approved for the trial loan modification offer means you are in all the way in the safety zone and have nothing else to worry about, because you can still be denied during the probationary/trial period. The trial period is usually 3 months to see if you are able to make the minimum payments or not; but there are trial periods that go beyond that time timefram. Just stick to the trial period timeframe, and if you go beyond the trial period timeframe, still continue to pay. Remember! your mortgage loan is not modified until your proof from your lender arrives and says that you have successfully completed the trial, and your loan is permanently modified; then you get the documents notarized and send it back, and always keep a copy for your records.
You are not completely finished until you have supplied everything that is needed, and have made all of your trial modification payments on time. That is when you are on the right track towards finishing up your permanent mortgage loan modification. Once you are finished doing everything as your mortgage company wants you to do, and you get your final modification paperwork indicating you have successfully completed the trial loan modification period. At that point your mortgage is completely modified. It is a process, and if you do not follow through as requested, you can be denied at any point during the process.
Alway know that your lender wants to keep you in your home and keep you paying, that is profitable for them. Kicking you out of the property only increases their default rate, lower their future earnings from you and others not paying their mortgage, contribute to their non-performing assets, causes them a loss of income due to the foreclosure sale of the property. They want to work out a reasonable and profitable outcome with you. You might think that they just want to get you out of the property and take the house back, but that is simply not the case. Mortgage companies and mortgage servicers are not in the business of owning vacant properties and up keeping homes, they want performing mortgages. Foreclosure is something that lenders try to avoid as much as possible. On the other hand, they are times when they can not afford to get you a modification you seek, and they have no choice but to foreclose on the property to prevent any further losses.
Addition Loan Modification Insightful Help Tips:
A loan modification company will most likely give you another serious opportunity even after a denied if you are facing some extreme circumstance such of death of the main provider in your family, if you are too old, if you have an attorney and they are filing a law suit because you were not modified unfairly, if you are handicap, have young children and are a single parent, if you threaten to go to your elected officials or the media to complain, if you are an active service member deployed or the spouse of an active service member deployed, among other things. So there are exceptions to the rule, if you think that you might fit into any unsual circumstance that may benefit you when it comes to getting a mortgage loan modification bring it up to your lender, and putting it in your hardship letter because it may benefit you greatly.
The Hardest Hit Program by President Obama:
Under one of the latest mortgage programs that came out under President Obama to help homeowner all across the country does not seem to be very popular or well known to the general public. This latest program came out in early 2011 and is called the Hardest Hit Program. Each state was given funds by the federal government to assist homeowners needing help with their mortgage payments. Each state varies with the different types of program that they have available, but they all have one thing in common, and that is to help financially strapped homeowner.
Check with your local governmental official to get help, it’s available. Start by calling your local governmental agencies for the indigent/working class, and work your way up to the governor’s office. With all of the mortgage programs that are out, you stand a good chance of getting some relief with your mortgage delinquency, payment and interest rate. Again, the program is called the Hardest Hit Program, and it for struggling homeowners. The funds were allocated to individual states across the country, but you must request for assistance to get it.
We have tons of tips and trick to make the most of your mortgage situation, and help you take charge of your mortgage problems. Keep following up on the latest mortgage strategies for getting a lower mortgage payment regardless of your credit. In fact, you don't even need credit whether you are in foreclosure or not; you can get help to lower your mortgage payment. Get your loan modified today! Now make that call to your lender with confidence and get a mortgage loan modification!
If you do not feel that a mortgage loan modification is something you can accomplish on your own, or maybe you just do not have the time or patience for it and need professional help, you may email us at: support@mortgagecrisistips.com with questions or request for help.
There are many mortgage industry secrets that the average person might not know about. In discussing some of them, we will go over several keys secrets that can be very helpful in understanding how mortgage companies, lenders, and servicer's operate. Mortgage companies, just like any other company are in business to make money, and they do a great job at it. There are many things that mortgage companies would rather you not know about the industry. We will continue to cover some of them.
MORTGAGE ACCELERATION GUIDE :
Pre-payment of your mortgage to reduce your outstanding mortgage principal drastically/ & build Equity quickly:
Pre-paying your mortgage is one of the biggest mortgage secrets out there. Pre-payment is an interesting topic, the reason being is that you can save yourself a great deal of money by doing so and shortening your mortgage loan life span tremendously! All you have to do is check your loan contract to see if you have a pre-payment clause in it that allows you to pay down your mortgage quickly with little or no effect.
Many mortgages allow a borrower to pay down their mortgage substantially, which can sometimes cut their mortgage payment time in almost half, assuming you do not have a adjustable mortgage rate. If you want to pay off your mortgage early all you have to do is this; get out your mortgage amortization schedule, and if you don't have one you might be able to get it online, or you order it from your lender for a few dollars. Once you get it open it up and look at your payment schedule. You can see from your 1st mortgage payment to where you are right now into terms of the last house payment you have made. Your payments has a break down of the principal and interest, and it give you a break down of how each payment is applied in terms of principal and interest.
What you will notice is that in the first few years on your payments, a tiny amount of your payments are going to the principal balance, most of the payment is going towards interest; 1st 5 yrs. That just how mortgage loans are set up due to the length of time it takes to pay off a mortgage, you lender has to benefit and they benefit big time. Now look at this, lets say you have some extra money and want to start cutting out some of the years on your mortgage payback. Lets say you have had your mortgage around 2 years now, and you have just made your 23rd house payment. So on your next payment(the 24th payment based on your amortization schedule)all you have to do is send in your regular payment, and in different envelope mail in the next principal payment amount for the next payment, or for the next 10 payments; Listen carefully, do not mail in your payment but just the principal amounts for your next 10 payments and once you payment is applied to your principal balance you have just wiped off 10 months off your mortgage loan timeframe. You can do this over and over again to wipe away years and build equity super fast, the rich use it all of the time to build wealth fast. Your house is most likely your biggest asset in good financial times. All you have to do is on the payment that you are paying early, just put in the "memo section of your check," "this payment is to be applied to my principal payment for payment(s) #25(or what ever principal payment number that the payment(s) is for)." When you do this 2 things happen. First, you have just avoided paying future interest on those principal amount that you have decided to pay for now; so you don't ever have to worry about paying that interest amount anymore on those principal payment you have already made, because you have just paid the principal early and if you have paid the principal there is no interest payment to make. Secondly, for the principal amounts that you pay now, early, you take those many months off your mortgage payments in the future. The earlier you start doing this with your payments as described when you 1st get your mortgage, the more beneficial it is for you in the future. Regardless, you can start to benefit at any point during your mortgage loan. The reason is that as you pay more interest in the earlier years of your mortgage on a regular loan, the earlier you can reduce your mortgage payments by many years or more, and build equity really quickly. Another example, lets say I have a $1,500/month mortgage payment, and I am now getting ready to pay my 5th mortgage payment but I want to wipe off and additional 1 year of my 30 year mortgage; All I would have to do is send in the payment for my 5th payment(which includes principal and interest) of $1,500 in one envelope, and in another envelope I would send in another payment for my principal payments amount only! for my 6th-17th principal payment amount(which does not include any interest) and put that in the "memo section" of my check , to be applied to future my principal payments for principal #6-17. Just by doing that I have just reduced my mortgage pay back time by one whole year. Remember, the principal payment in the early years are usually very small, and they get bigger as the years go by, and as you bring the mortgage balance down. Imagine if you did this only once a year, you could save a bundle. Anyone can do this, but not everyone is aware exactly how to do it correctly, we are mortgage professionals who practice these techniques regularly, and you can too. Mortgage companies do not want the average borrower to be aware of these powerful techniques because it would be too financially costly for them; it would cut deep into their profit and force them out of business.
OVIEW AND MORTGAGE UPDATES:
Our government has completed the details on the mortgage stimulus plan. The program is primarily aimed at lowering the mortgage payment of homeowners. The Housing Affordable Modification Program(HAMP) requires a homeowner to have a certain housing to income ratio, it is 31% or higher, this specifically relates to housing expense in comparison to gross monthly income. There are several mortgage loan modifications programs out, and they tend to focus on a housing to income(HTI) of around 31%. A home owner with a HTI of less than 31% HTI can sometimes struggle to get an approved mortgage loan modification, but it does not necessarily guarantee failure. However, mortgage companies are often matching some of the term of the HAMP with their own in house mortgage loan modification program that are more flexible. Please keep following up on their progress. For Loan Modification most frequently asked questions see http://www.mortgagecrisistips.com/FAQ .
Those unfortunate souls that have tried with no luck should consider a few important things before “throwing in the towel and giving up” on any hopes of getting a loan modification. You might be one of those homeowners. First and Foremost, you should talk to your lender and continue pleading with them and give them the reasons why you can not afford your high mortgage payments; Give reasons such as the current interest rates being offered that are extremely low at this time. Explain how loosing your home will hurt you and your family, and why foreclosure should be the last option for you both. If they keep on giving you “the run around” and excuses then you might want to consider seeking professional help with experts who are fully experienced in this area than you might be. There are usually charges associated with getting a modification through professionals, these charges often run in the thousands of dollars. You will want to sit down with your family and weight the risk of keeping the high mortgage payment you currently have, and consider taking a chance on getting some professional assistance. Let me tell you the savings could be tremendous over the years from getting a lower payment. If that is out of the question for you due to the fees associated with a loan modification, then continue reading. You may also purchase access to step by step guidance to getting a loan modification above for a small fee, professional use these same techniques that you will be given access to once payment is made. If you call to you lender or servicer and can’t seem to get any real help, then escalate to upper management your needs for a loan modification until you are heard loud and clear! Please understand, there is a time frame associated with getting help to lower your mortgage, however, you can get the sense when your are being ignored and if you are “getting the run around.” Keep pressing the reasons why you need help with your mortgage payment, plus the benefits associated with that, and why a foreclosure should be the absolute last result for you both.
If you find yourself getting further and further behind, there are some things that you will need to know. Find out from your lender what your final date to avoid foreclosure by making a payment is. Educate your self on that date, and become familiar with it because it changes often. That date is often called a demand date or the foreclosure avoidance date. That is the last day that you have to make at least one of your full mortgage payment in order to try to avoid foreclosure, it is usually around the point where you are about 3 months past due on your payments, but it could be longer. However, some loans are allowed to go beyond the 3 month past due point, again find out from your lender or loan servicer what your date is. Once you are aware of that date you can use it to your advantage; Lets say you are around 3 months behind, as long as you can get in at least one full payment by that date, then your don’t have to worry about foreclosure even if they require payment in full, one payment will buy you some more time. You might still have the mortgage company calling you for payments but at least you know that once you stay ahead of that date by paying, you can continue to coast on by. Another thing to know is, whenever you make a full payment before that foreclosure payment date your will get anther 30-45 days before you have to make another payment to avoid that date again in the future.
If you are unable to make a payment before that foreclosure payment date at any point, remember that you can dispute anything on your account based on Real Estate Settlement Procedures Act(RESPA), and buy valuable additional time to avoid a foreclosure. Or if you are in foreclosure it will allow you to avoid a foreclosure sale just by disputing something with your lender. The only thing you have to do is to send a valid written dispute of anything on your account, and your lender has 60 days to investigate and send a valid response. That buys you valuable time to build up additional funds or continue to pursue a lower mortgage payment. For example, write into your lender or servicer right before your demand date or foreclosure date is fixing to expire and dispute something like the charges on your bill, or why you don’t think you are being treated fairly when it comes to you getting a loan modification to lower your house payments. That’s a valid written dispute, and that will cease any progression of your loan going into foreclosure, or if you are already in foreclosure it will delay a foreclosure sale until you lender responds. They have up to 60 days to respond; but many mortgage companies try to respond with in about 30 days, so that they can pick up with your loan where they left off, and continue to progress the account. Make sure all of your disputes are sent certified with a return receipt request, that way you know when they received it and who signed for it in case you ever need the proof for court because you were evicted out of the property for non-payment. Then you have proof that you sent with a valid dispute which was ignored, and your loan progressed to a foreclosure sale anyways. You would have ground for getting back into the property, and for recovering any expenses associated with the eviction if your lender is faulted. I have seen many cases like that in my years of being in the mortgage field. Lets say, you were disputing your mortgage just to buy time to figure out your next payment or to move out, then that could give your another 30-60 days worth of time which could mean a big difference for you and your family if you used the time to your benefit..
Even if your property goes into foreclosure it does not mean that you have lost it. First of all, your mortgage company does not want to have a foreclosure, it’s almost always a last option. Unless you have great amounts of equity in the property and your mortgage company would benefit by foreclosing when the time was right; Then yes, a foreclosure might not be so bad for your mortgage company to pursue because they might end up getting most or all of their money back from the foreclosure sale; But most homeowners are not in that position at this moment, many are upside down. Regardless, if you make it into foreclosure, they will try their best to work out a re-payment plan to try to bring you back out of foreclosure, and get you paying on a strict repayment plan if your finances will allow you to do so. If that can’t be accomplished, they will try to complete the modification you have been seeking, a short sale of the property, or a Deed-in-Lieu of foreclosure 1st before they do the foreclosure sale. More lender will not give a deed-in-lieu of foreclosure where they take back your property, and relieve you of your obligations if you are with in 60 days of your mortgage sale date, but there are plenty of ways around that. An account will sit in foreclosure for 2 to 11 months depending on the state where the real estate is located before a foreclosure sale date can take place, and you can try to work out one of the above options that I mentioned in the mean time. For example, In New York a homeowner has close to a year once their account goes into foreclosure before a sale is completed. So if you think about it: you could go 3 months past due on your payments, then you might go into foreclosure for about another 2 to 11 months before a foreclosure sale date is set, and an eviction notice could take another 30 days or more. That‘s a lot of time not paying your mortgage and living mortgage free if a homeowner really wanted to take advantage of the situation. It could take over a year to complete the whole foreclosure process, and you could be living for free all of that time, depending on which state your property is located in. Who knows what your financial situation could be in 1 year or 2 down the road.
In some cases if all else fails, and you really like the property and want to stay there, you might be able to work something out with the new owners once you’ve learnt of his/her identity after the property sale is completed. You might be able to stay on the property as a renter. If you explain to that person(s) the reason why you became delinquent on your payment and they genuinely believe you and understand your situation they may allow you to rent depending on their intentions. Especially if they were going to use the property an investment property; They might be able to give you a new lower payment, and allow you to stay there for a while in some cases. You might even be able to buy back the property in few years once you’ve developed a good payment history with the new owners. The possibilities are endless.
Some homeowners have opted for trying to sell their home with professional help. They might hire a realtor to market and sell the home for them. Or they might find other non-traditional ways to sell their home such as sale by owner, arm length transaction offers to their lender by close relatives or friends, or opting to sell on ebay! Yes, I did mean you could sell your home on ebay.
If paying is not possible by the sale date, then just keep requesting for sale date extensions through your lender. There are some mortgage companies that will extend a sale date 5 time without the homeowner paying in some cases with the right reason.
TEASER/ADJUSTABLE RATES
When the mortgage industry was hot and many people around the country were buying real estate in the early 2000'S, mortgage companies were happy with all the new business they were getting. That was in the time period when credit was given out easily to almost anyone with a job, and or had fair credit. The industry was booming and we had the highest homeownership rate ever in the history of this country. There were some real estate agents making millions selling high priced real estate, and the need for loan officers to close on those deal were high. The lending institutions started hiring taxi drivers, pizza delivery driver, fast food restaurant workers, or anyone with a high school diploma and had the ability to fellow simple instructions unbelievable money. Many of these individuals came from minimum wage jobs and started to make $20-40,000 a month to close mortgage deals. Their income transformed quickly.
Then after the new home buyers started to fizzle out, homeowner started becoming late on the payments, and previous buyers need new cash infusions, then came the refinance era. Refinance ruled for years between 2002 and 2007. Banks and mortgage companies started to refinance all those homeowners that took out home loans a year or 2 earlier, and now had equity, and many new homeowners suddenly had lots of equity in a short space of time. They were drawn into these low interest or teaser rates, also known as adjustable rate mortgage loans(ARM). These loans promised a great new low rate for a fixed period of time, usually up to about 5 years. Then after that period passed then the rate starts to adjust, and sometimes like crazy. The rates adjusted and based on the London Interbank Offered Rate(LIBOR). A typical ARM loan would start out somewhere around a 3% interest rate for 3 yrs, and then after that is starts to adjust maybe every 6 months, for the rest of the life of the loan. The 1St adjustment does not move more than 3 points up. For example, if you started out with a 5% interest rate and your loan is now ready to adjust your interest rate will not go up more than 3% =8% interest rate for the next 6 months, and so on. There is usually a ground and a ceiling for your interest rate; which is the loan's lowest and highest possible rate percentage. Mortgage companies made allot of money using ARM loans to entice many borrowers looking for easy refinance money, and then the borrowers watch their interest rates in most cases, go up a great deal. This type of loan is usually a good choice in a strong real estate market that is appreciating, and also good if you plan on not staying in the home for more than about 5 years; Otherwise it might not be wise to keep this kind of loan long term.
PROPERTY TAX SALE OVERVIEW
Property tax is necessary if you want to buy a home, unlike living in an apartment. Property taxes helps to pays for school, roads, teachers, police officers, fireman, among other community services. If you don't want or expect to pay property taxes you should not buy a house. Usually when someone buys a house in any year their taxes are not due until the next year at a pro-rated basis. You are being pro-rated for the year that you bought the property and you may not have had the home in your name the whole year, therefore your 1St year's taxes are usually pro-rated. You will have a set amount of time to pay those taxes or else your will start to incur penalties for your taxes being past due. If you continue to keep your property taxes past due, then your local taxing authorities can begin the process of selling a tax lien certificate that was placed on your property to try to recover the delinquent taxes that you owe. The tax sale is usually publicized for potential bidders to get information on the tax sale. All counties across the country hold usually conduct property tax sale, normally monthly on a set day. For example, the 1St Tuesday of each month at the local court house or downtown. They will bid on the tax amount owed, lets say a homeowner has $500 in past due taxes. They will start the bidding at a set price, usually the price of the taxes owed, and hopefully they will sell the tax lien certificate to the highest bidder. If the certificate is bid up to $1,000 to the highest bidder, then that's what the highest bidder will have to pay($1,000) for the $500 delinquent property taxes owed. The homeowner now has a set amount of time to pay back the $1,000 which is at a set interest rate based on that tax certificate terms. The interest rate paid back on the certificate is varies, but a common one is maybe 25% interest charged if paid back from day 1 to 180 days after the sale of the tax certificate; then 50% interest charged from 181 days to 365 days after the sale date; then 75% interest from 366 days to 546 days after the sale date; then100% interest from 547 days to 730 days after the sale date. If the homeowner does not pay back the money owed within a set time, which varies from state to state; then the bidder will end up owning that property free and clear of any obstacles. The bidder will now need to just get a real estate attorney to put that piece of property in his/her name, because that person is the new property owner and owns the property outright. The bidder does not have to pay mortgage payments on the property, they own it free and clear. That's the beauty of a tax sale.
Mortgage companies will always keep on the look out for any of their homeowners who are not paying their property taxes, or who have fallen behind on their taxes. They will sometimes threaten them with possible foreclosure actions if they don't hurry up and pay their past due property taxes; The reason is, the mortgage company has a stake in that property and does not want that property to go up for a tax sale due to the homeowner not paying their taxes on time. So many companies will pay their borrowers property taxes for them and then increase their house payments to recover what they have paid out on behalf of their homeowner, which is called a forced escrow. Since a homeowner's account was not set up to have their property taxes/and or the insurance escrowed; they were to pay that on their own but somehow they did not, and the mortgage company ended up paying it for them. So they now see a higher house payment until the paid taxes or insurance have been recovered.
Lenders do not always catch properties that have delinquent taxes and so the property can end up a local tax sale. Mortgage companies loose properties from time to time due to the taxes liens going to sale, and the homeowner are not able to pay off those taxes in time to recover the property from a tax sale bidder that has a tax certificate on their property. This risk of loosing a property to a tax lien is built into each mortgage contracts.
If someone owns a house and is having problems paying their property taxes they should talk to their lender to see if they can work something out. The worst thing to do is to try to avoid the topic with your lender, and hope everything works out fine in the long run. Sometimes your lender might not find out that you are behind on your taxes, and if they find out they will pay your taxes allot of times to try to avoid a possible tax sale.
