Sammarusich Blog

Mortgage fraud has been on a steady rise in recent times and the Financial Services Authority (FSA) is currently looking into 200 scams that were all related to the mortgage industry.

The FSA believe that the fraud goes far beyond people exaggerating about their salaries in order to get the house they want, they believe that there are organised rings within the mortgage industry that are gaining huge profits from defrauding the mortgage and property industry.

The FSA are estimating that the current losses on each new build house connected to the mortgage fraud surge stands at

The Mortgage Rebate is negative points that are due to the buyer. The discount points are upfront fee to lower the interest rate. The discount points are paid by buyer, while negative points are paid to the buyer. Each point equals one percent.

This entices the buyer to buy a home. Since the buyer pays huge cost to buy a home, the buyer loves the Mortgage Rebate. Mortgage Rebate can offset the down payment, and closing costs.

For example, the home is for sale for $300,000. The buyer agent offers 1 negative point to the buyer. The buyer receives $3,000.

Traditionally, the seller pays five or six percent commission to the seller agent and buyer agent. The seller and buyer agent splits the five or six percent commission. For example, the home is for sale for $300,000. The seller pays $18,000 commission on six percent ($300,000 price x six percent). The seller and buyer agent gets $9,000 each for commission ($18,000 total commission / 2).

On a 1 negative points, the buyer gets $3,000 ($300,000 price x 1 percent). So, the buyer agent takes home a $6,000 commission ($9,000 buyer commission – $3,000 Mortgage Rebate) after buyer agent gives the Mortgage Rebate to the buyer.

The mortgage lenders may advertise like 6% interest rate with 1 discount point, 6.25% interest rate with 0 discount points, 6.50% interest rate with 1 negative point, 6.75% interest rate with 2 negative points, or 7% interest rate with 3 negative points. The negative points are Mortgage Rebate. As the buyer receives higher negative points, the interest rate is usually higher.

Another form of Mortgage Rebate is fixed amount. For example, the buyer receives $1,000, $2,000, $3,000, or $4,000 Fixed Amount Mortgage Rebate. It can also be in the form of gift certificate. Some form of Mortgage Rebate is a credit to the costs of buying a home.

As the buyers rejoice on Mortgage Rebate, some lobbyists wants to ban the Mortgage Rebate. Fortunately, the Mortgage Rebate is still legal on the Sunshine State more commonly known as Florida. Kentucky also allows the use of Mortgage Rebate.

However, the state of Alaska, New Jersey, Kansas, Oklahoma, Rhode Island, Louisiana, South Carolina, Mississippi, West Virginia, and Missouri bans Mortgage Rebate. For Alabama, South Dakota, Oregon, and Tennessee, the Mortgage Rebates are only credits to closing costs.

When you are shopping for Mortgage Rebate, you should check if the Mortgage Rebate is ban in your state. The best Mortgage Rebate can cover the whole closing costs.

When you need to obtain a mortgage for bad credit, there are a couple options you have to choose from. Before you commit to anything, it is crucial that you know your options and spend some time thinking about this important decision. Whatever you decide is something you may be stuck facing and paying off for the next 30 years, so do not take this decision lightly.

Your mortgage for bad credit options are basically the following:

1. Search for and try to find the best offer with your current credit situation
2. Focus on credit restoration to qualify for preferred treatment

There are a number of companies and organizations that will approve you for a home loan no matter what your credit score, but that comes with major consequences. You’re likely to pay outrageous fees and the interest you’ll pay on the loan will be two to three times the average rate.

As a result, not only will it cost you hundreds or even thousands of dollars more to live in your home every month, but by the time you pay off your mortgage it could cost you hundreds of thousands of dollars more. That’s because each month you pay your mortgage, more money is sent to the bank to pay interest than to actually owning your home. You’re simply paying a fee.

Whether you need a mortgage for bad credit to purchase a new home, refinance your current home, or buy a second home, you’ll end up paying more with these plans – and not just in mortgage payments. Because of your bad credit, your closing costs could be higher and you may end up paying private mortgage insurance (PMI), which is nothing more than a fee because of your bad credit score.

This can all be entirely eliminated by simply planning 30 – 90 days before you purchase your home. By putting a little effort in restoring your credit, you can erase any worries about getting approved for a mortgage. In doing so you’ll save thousands of dollars in the process and reduce your closing costs.

If you are refinancing your mortgage there are a number of fees and penalties you want to avoid paying. Many homeowners focus only on finding the best interest rate when refinancing their mortgage loans. These homeowners often overpay for everything else on their loans and take out mortgages with prepayment penalties. Here are several tips to help you avoid overpaying for your new mortgage with a prepayment penalty.

Mortgage lenders include prepayment penalties in their loan contracts to discourage borrowers from refinancing the loan. If you sell your home or refinance before the penalty expires you will be required to pay a fee. Prepayment penalties can be quite expensive; it is common for lenders to charge up to six months worth of interest on 85% of the original loan balance. If you finance your mortgage with a bad credit you can expect more stringent prepayment penalties included with your loan.

There are ways to avoid prepayment penalties, even if you have poor credit. The first thing you should check before mortgage refinancing is if your existing mortgage includes this prepayment penalty. If your current mortgage does not have a penalty or the penalty has already expired you are clear to begin mortgage refinancing. If your prepayment penalty has not expired, you can try negotiating with your current lender to see if they will discount or waive the penalty for you. If the existing mortgage lender will not negotiate you will be required to pay the penalty to refinance your loan.

When mortgage refinancing, most items on the loan contract are subject to negotiation. If you haven’t signed the contract and you find it contains a prepayment penalty, you should negotiate with the lender to have that penalty removed. If you have excellent credit your credit rating is a bargaining chip; threatening to find another mortgage lender will usually do trick. Another thing you could try is offer to pay an additional point in exchange for having the penalty removed. Points are a fee you pay in exchange for something from the lender. You can negotiate to pay points in exchange for a lower interest rate or more favorable terms, in this case to remove the prepayment penalty.

To learn more about mortgage refinancing while avoiding costly homeowner mistakes, register for a free mortgage guidebook.

Mortgage modification is a process through which terms of a mortgage are modified outside the original terms of the contract agreed to between the lender and borrower and this entitles the lender to hold the lien on the property till the mortgage is fully paid. In short, any change to the mortgage terms is a modification. Mortgage modification become popular, thanks to the Making Home Affordable program.

Mortgage Modification is becoming a reality as homeowners are struggling to make their regular payments due to the current global recession and fear losing their home due to an impending foreclosure. Some of the major lenders are JP Morgan Chase Bank, Bank of America, Wells Fargo, etc.

Eligibility criteria:

A home owner is eligible for mortgage modification if:

a) They live in the home
b) They current loan limit of $625,000 in high cost areas and $417,000 in other areas
c) They current house payment is more than 31% of gross income
d)They ability to prove your current income
e) They are currently employed

Documents required:

a) Hardship letter
b) Proof of income tax returns for the last two years
c) Copy of W-2 forms for the past two years
d) Copy of bank statements for the past two months
e) Copy of bank stubs for the past two months
f) Copy of your recent mortgage statement

The Mortgage Loan Modification hardship letter must be honest, sincere and represent the facts clearly making the lenders convinced about the situation that caused you to fall behind was temporary and you are now in a position to make your payments on time. You can mention loss of job, divorce or separation, military service, death of family member or co borrower, illness, medical expenses, natural disasters, etc., as reasons that you have temporarily fallen behind on your Mortgage.

All the documents may be submitted to the Mitigation Department of the lender and on satisfaction of all the submitted documents, the lender will contact you shortly.

Advantages:

The most important benefits of a Mortgage Modification are

Reduction in interest rate or a change from a floating to a fixed rate, or in how the floating rate is computed Reduction in principal Reduction in late fees and penalties, if any Extension of loan term Capping the monthly payment to a percentage of household income Avoid foreclosure and relief from losing home

Disadvantages:

Mortgage Modification has its own draw backs also, some of which are

Homeowner only has one shot at the Modification and so it is necessary to get it right the first time. Ensure that mortgage modification parameters are quite affordable to you As the lender is not going to earn anything from modifying your loan, they will naturally try to put their terms on you which may not be helpful to you In view of the high rate of foreclosures, there are chances of scams.To dodge these scams, ensure that you are not required to make a ‘down payment’ to anybody during the entire mortgage modification process

Not withstanding the minor disadvantages, we can undoubtedly say that a mortgage modification is imperative to avoid foreclosure and obtaining one is the best way for homeowners who want to save their home from foreclosure and stay in their own home with peace of mind.