Specialty Financing And Foreclosure

Specialty Financing And Foreclosure

by Molten

It is an unfortunate reality that thousands of people are currently facing the possibility of losing their homes to lender foreclosure. The fact is that over the past several years, more and more people were put into risky loan products that appeared sound on the surface, but were really awash in consequences. Many of these loans featured attractive payments for the first few years, but those low payments are expiring and many people now have the task of trying to stop foreclosure.

Perhaps the single most important step any one can take is to contact the lender before defaulting on the loan. Almost every lender in this country has a program or two specifically for people to avoid foreclosure proceedings from taking place. The programs may differ, but they share a common goal: to stop foreclosure.

When you contact the lender directly, you will be advised of the programs for which you qualify, which can range from restructuring of the existing loan, refinancing the loan, or enrolling in a workout type plan. Any of these can be viable options, depending on your situation and how far behind you are. Know that no matter which option you choose, it will likely cause a dip in your credit score, but it is still nowhere near as low of a decline in rating than you would experience if you did not stop foreclosure.

The reason that these companies want to help is that foreclosing on a property is not ideal for a lender; they, more often than not, lose money on the deal. It really is a lose-lose situation; you lose your house, and they lose money. However, in some instances, the programs they have are not suitable for your situation; you may be faced with the prospect of selling the house to stop foreclosure.

This is obviously not ideal, but to stop foreclosure proceedings from occurring, and assuming you can sell the house quickly and for enough money to pay off the loan, then you may want to look into this. If you are facing foreclosure, then you will probably already be bombarded with mailers from investors who are hoping to make a quick buck at your expense. Unless you need to sell immediately, and cannot wait for a realtor to find a suitable buyer, and you are certain that the investor is going to follow through with the deal, then careful research of the offers can stop foreclosure.

The added bonus to this kind of deal is that your credit will not have been too negatively impacted and you can still shop for another loan on a new home. As you do, be wary of the specialty loans. Interest-only ARMs may look good from the outset, but unless your house is going to appreciate in value exponentially, or you know for certain that you will have a lump sum of cash on hand when the loan comes due, then beware. Otherwise you may find yourself back where you started, trying to stop foreclosure.

Overall, to stop foreclosure, the first step is to talk to the lender directly. If they can offer you a workout plan, a restructure, or even a refinance of the loan, then you can get out from under the possibility of losing your home. If these options do not work, then it may be time to stop foreclosure through the sale of the home. Whatever the situation, just know that to stop foreclosure, you need to be proactive in the process, because the lender is not going to stop the proceedings because they feel badly for you-the only way to stop foreclosure is to fix it, and fix it quickly.



Molten Marketing Member, James Redmond, has more suggestions and ways to avoid or stop foreclosure. Visit The Best Home Offer.com for help.

Article Source: http://www.myaddirectory.com

Loan to value and downpayments

Upon making a mortgage loan for purchase of a property, lenders usually require that the borrower make a downpayment, that is, contribute a portion of the cost of the property. This downpayment may be expressed as a portion of the value of the property (see below for a definition of this term). The loan to value ratio (or LTV) is the size of the loan against the value of the property. Therefore, a mortgage loan where the purchaser has made a downpayment of 20% has a loan to value ratio of 80%. For loans made against properties that the borrower already owns, the loan to value ratio will be imputed against the estimated value of the property.
The loan to value ratio is considered an important indicator of the riskiness of a mortgage loan: the higher the LTV, the higher the risk that the value of the property (in case of foreclosure) will be insufficient to cover the remaining principal of the loan.

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How Construction Loans Work

Construction loans are designed to help individuals build or remodel their homes. The loan is built around an appraisal, land value, scope of work (new construction vs. renovating), a construction budget, the borrower's credit and assets.
Construction loans are more complex than purchase loans because of many factors. These include establishing an accurate budget, finding a contractor, receiving an appraisal that justifies the cost, and having the financial strength to secure the loan. Construction loans also encompass the payoff of the building site. Because construction loans are complex – and risky – they often carry higher interest rates and closing costs than a refinance or purchase loan.

Some construction loans only cover the actual construction term, while others are called “construction to permanent” loans. A construction to permanent loan means once the home is finished, the borrower modifies to the permanent financing of their choice. This can be the most favorable choice since there is only one set of closing costs.

Funds are taken from the loan through a process referred to as a “draw.” A draw is the method by which funds are taken from the construction budget to pay material suppliers and contractors. Each lender has different requirements for processing a draw. For example, some allow the borrower to request draws online, while others require paperwork and periodic inspections.

Construction loans usually last for 12, 15, or 18 month terms. During construction, interest payments on the project are paid through the loan. An “interest reserve” is set aside in the loan to make payments for the borrower. So, while building a home, a borrower is not required to make payments on the land or project.

This page was last modified 02:55, 21 December 2006.
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97% Of American Homeowners Overpay Their Lender In Mortgage Interest Every Month.

If you own a home, have just re-financed or are shopping for a mortgage, you’ll be outraged.Housing: Americans across the country were shocked to hear of a new poll that states 97% of homeowners here in America are overpaying millions of dollars each month in mortgage interest.The National poll was conducted last month to determine how many homeowners take advantage of the prepayment loophole in our mortgage system, which eliminates costly interest overpayments.

The shocking results showed only 3% of America’s homeowner population utilize this loophole and take advantage of the valuable benefits created by it.When Sean Drover, a Chicago businessman and homeowner found out he was overpaying $217 in mortgage interest every month, he was appalled. “Honestly, I was sick to my stomach when I thought back on all the monthly payments I’d made.

If I would have known about the pre-payment loophole when I first bought my home I could have put all that money into equity instead of my lenders pocket.” The problem lies with what the banking industry calls “front loading”. This is when the majority of a homeowner’s payment is applied towards the interest on the loan instead of the original amount borrowed.

The disturbing fact about front loading is it ensures you’ll pay over three times the original amount borrowed. Thus, resulting in enormous profits coming straight out of your pocket and directly into your lenders. … Most people (97%) never stop and take a good look at how damaging the system really is. Unfortunately, it’s just the way conventional mortgages are structured here in America.Average Homeowner overpays $60,000In fact, the average homeowner in America is overpaying $2000 in mortgage interest every year, or $60,000 over the life of the mortgage. “That’s an enormous amount of money”. Says top mortgage analyst, Craig Romero. “This is money that homeowners are needlessly giving away each year. Imagine what a person could do with an extra $60,000.While gaining back thousands of dollars from these overpayments is a huge benefit, it’s not the only one.

Cutting up to 10 years from the term of a traditional mortgage is also another major advantage.“I’ve been using the prepayment loophole for years”. Says Denver homeowner, Curtis Landau. “I’ve actually been able to remodel my home and pocket about $25,000…all from the equity that was built so quickly.” Americans must understand this prepayment loophole isn’t something lenders are eager to share with their customers. If they did, they would risk taking a huge cut in profits.With over 50 million mortgages in force, it’s estimated Americans overpay their lenders in excess of $12 billion every year. It’s no wonder this loophole is kept secret…lenders are undoubtedly getting rich off these interest overpayments.

Written by Craig RomeroTo see how well the prepayment loophole will work for you please enter his site at: http://www.wisemortgageinfo.com Craig Romero is an author and mortgage analyst dedicated to helping homeowners maximize the investment in their homes.