This article describes some basic steps one can take to improve the chances of approval for a mortgage loan.
Have Stable Monthly Budgeting Habits
It is a good practice whether awaiting for a loan approval decision or not to always maintain a stable monthly budget that utilizes wise spending, saving, and income earning habits.
Maintain Healthy Credit Scores
Your credit scores and your credit reports will have a big impact on the lenders decision to approve or deny you the funds you need to buy a home. You want to ensure that your credit score is as high as you possibly can get it. This means checking your reports and ensuring that all info and activity is accurate and that their are no mistakes that are hurting the appearance of your credit history.
Make sure you understand credit score basics so that you are able to do what you need to do if something is out of place. If you don't understand what your looking at than how will you know if it is OK?
Pay Off Unsecured Consumer and High Interest Debt
If you have credit card debt, owe money on store credit accounts, personal bank loans, or any sort of high interest debt than you really should pay it off.
Lenders are not going to want to lend money to folks that owe on a lot of rip off high interest credit cards or other sorts of unsecured debt.
At the very least you need to consider a debt consolidation loan with more favorable terms.
Be Upfront with The Bank or Lender - Tackle Obvious Approval Issues First
If there are some obvious weaknesses on your loan application it is a good idea to bring them up first. This allows you to offer an explanation instead of coming up with an excuse for when they find out about it anyways. Plus you will be able to avoid applying for the loan if the weakness is a automatic disapproval trigger for the lender.
If nothing else this will make you appear and feel more responsible as a borrower.
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Four Highly Effective Habits of the Financially Healthy and Wealthy
Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts
Sunday, March 20, 2011
California Hardest Hit Fund Foreclosure Assistance - Strategic Focus
The California State Housing Authority has taken targeted measures to provide assistance to homeowners in financial hardship through the Hardest Hit Fund.
Like all states receiving help from HHF they have worked hard at developing innovative mortgage assistance programs targeted to the specific needs of their homeowners foreclosure assistance needs.
In addition to developing new programs they have adopted the approach of improving and expanding existing efforts and foreclosure prevention programs already in place.
California has decided to hyper focus borrower assistance resources towards aiding low to moderate income homeowners.
A core theme in the development and design of their approach is to ensure that their programs and the operations of their assistance efforts remain flexible and agile. This is in response to the success that the Obama home affordable mortgage assistance programs have had with the same approach.
To get the most bang out of their buck California foreclosure assistance efforts has put significant measures in place to have lenders, loan servicers, and PMI insurers to match their efforts dollar to dollar.
Related Articles
California Foreclosure Prevention Programs - Hardest Hit Fund Program
Like all states receiving help from HHF they have worked hard at developing innovative mortgage assistance programs targeted to the specific needs of their homeowners foreclosure assistance needs.
In addition to developing new programs they have adopted the approach of improving and expanding existing efforts and foreclosure prevention programs already in place.
California has decided to hyper focus borrower assistance resources towards aiding low to moderate income homeowners.
A core theme in the development and design of their approach is to ensure that their programs and the operations of their assistance efforts remain flexible and agile. This is in response to the success that the Obama home affordable mortgage assistance programs have had with the same approach.
To get the most bang out of their buck California foreclosure assistance efforts has put significant measures in place to have lenders, loan servicers, and PMI insurers to match their efforts dollar to dollar.
Related Articles
California Foreclosure Prevention Programs - Hardest Hit Fund Program
California Mortgage Foreclosure Crisis - Hardest Hit Fund Assistance
The Hardest hit Fund has contributed approximately 700 million dollars to aid California's fight to stop foreclosure.
California homeowners have endured comparatively high levels of financial hardship. Many borrowers in California have lost the ability to make mortgage payments due to a loss of income, divorce, medical issues and other typical causes of unpreventable hardship. The difference in California is that a large population of homeowners have been adversely affected by the unwinding housing, mortgage, and foreclosure crisis. Factors such as rising monthly mortgage payments and unprecedented statewide declining home values have created a compounding effect compared to other states. These horrific economic conditions have triggered an even worst and unforeseen trend in which homeowners are now strategically defaulting on their mortgage because of the overwhelming drop in home values and thus home equity.
The housing slump and economic hardships experienced in California are dramatically worst in comparison to other states. This difference appears both in the size and severity of the declining trends of the housing and mortgage slump as well as the rising rates of foreclosures. The typical mortgage solutions and foreclosure alternatives that work in other states do not prove as effective in California because of the limited dollars available to help this large segment of California homeowners suffering through financial hardship and mortgage default.
These circumstances have led to the decision to financially assist the state of California in it's fight to stop foreclosure and provide homeowners assistance through available resources of the Hardest Hit Fund which was created trough the Making Home Affordable Plan.
California homeowners have endured comparatively high levels of financial hardship. Many borrowers in California have lost the ability to make mortgage payments due to a loss of income, divorce, medical issues and other typical causes of unpreventable hardship. The difference in California is that a large population of homeowners have been adversely affected by the unwinding housing, mortgage, and foreclosure crisis. Factors such as rising monthly mortgage payments and unprecedented statewide declining home values have created a compounding effect compared to other states. These horrific economic conditions have triggered an even worst and unforeseen trend in which homeowners are now strategically defaulting on their mortgage because of the overwhelming drop in home values and thus home equity.
The housing slump and economic hardships experienced in California are dramatically worst in comparison to other states. This difference appears both in the size and severity of the declining trends of the housing and mortgage slump as well as the rising rates of foreclosures. The typical mortgage solutions and foreclosure alternatives that work in other states do not prove as effective in California because of the limited dollars available to help this large segment of California homeowners suffering through financial hardship and mortgage default.
These circumstances have led to the decision to financially assist the state of California in it's fight to stop foreclosure and provide homeowners assistance through available resources of the Hardest Hit Fund which was created trough the Making Home Affordable Plan.
California Mortgage Help from Hardest Hit Fund Program
California Housing Finance Agency has taken measures to offset the consequences of elevated levels of foreclosure and mortgage default by developing government mortgage assistance programs through the Hardest Hit fund. The California Foreclosure Assistance Plan provides debt help and mortgage assistance for homeowners in financial hardship.
The California mortgage assistance programs have been developed by working with lenders, loan servicers, borrowers, housing counselors, and private mortgage insurers to create, develop, and utilize targeted mortgage solutions that will reduce the growing amount of foreclosures and help financially troubled homeowners keep their home.
Four California Homeowner Assistance Programs
The California Foreclosure Assistance Plan is composed of four mortgage help programs. Three of the four programs focus on creating an opportunity for homeowners to keep their home. The fourth program provides homeowners with foreclosure relocation assistance in the form of financial aid.
Though the foreclosure and home assistance programs will help a great deal of homeowners in financial hardship they will only put a dent in the entire California foreclosure crisis. These programs that are funded through the Making Home Affordable Plan's Hardest Hit Fund will act as an effective compliment to the Federal mortgage assistance programs such as the Home Affordable Modification Program and the Home Affordable Refinance Program.
The California mortgage assistance programs have been developed by working with lenders, loan servicers, borrowers, housing counselors, and private mortgage insurers to create, develop, and utilize targeted mortgage solutions that will reduce the growing amount of foreclosures and help financially troubled homeowners keep their home.
Four California Homeowner Assistance Programs
The California Foreclosure Assistance Plan is composed of four mortgage help programs. Three of the four programs focus on creating an opportunity for homeowners to keep their home. The fourth program provides homeowners with foreclosure relocation assistance in the form of financial aid.
- Monthly Mortgage Payment Assistance for Unemployed Homeowners - Provides homeowners with financial aid to help pay the monthly mortgage payments.
- Home Loan Reinstatement - Helps homeowners bring their loan current by providing financial assistance to pay of part of the past due balance.
- Mortgage Balance and Principle Cuts - Gives borrowers with upside down home loans financial aid to pay off part of the principle balance on the mortgage loan.
- Moving Assistance and Financial Aid - Provides borrowers who are losing their home due to a short sale or deed in lieu up to 5,000 dollars in foreclosure relocation assistance. This cash for keys like program provide financial assistance to homeowners who will incur moving expenses due to foreclosure.
Though the foreclosure and home assistance programs will help a great deal of homeowners in financial hardship they will only put a dent in the entire California foreclosure crisis. These programs that are funded through the Making Home Affordable Plan's Hardest Hit Fund will act as an effective compliment to the Federal mortgage assistance programs such as the Home Affordable Modification Program and the Home Affordable Refinance Program.
Friday, January 28, 2011
The US Economy Fires Up to End 2010
The GDP growth rose considerably to a annual rate of 3.2% up from the previous 2.6%
The market seems to be doing pretty well and those GDP numbers are pretty solid. Just the same I have some worries.
Housing is not looking any better and I think it is or at least could get a little worst. That scares me a bit. I think we are going to see a lot of foreclosures in the future and a lot of banks are going be taking on properties that they can not sell and I think that will be most of them.
Homeowners of course will do their best to stop foreclosure through a mortgage solution such as loan modification or even refinancing. But many will not be able to afford their mortgage payment or rather the home.
I suppose only time will tell. I would just hate to see things take a turn for the worst as I am not sure the economy has what it takes to pull itself back up from a double dip.
The market seems to be doing pretty well and those GDP numbers are pretty solid. Just the same I have some worries.
Housing is not looking any better and I think it is or at least could get a little worst. That scares me a bit. I think we are going to see a lot of foreclosures in the future and a lot of banks are going be taking on properties that they can not sell and I think that will be most of them.
Homeowners of course will do their best to stop foreclosure through a mortgage solution such as loan modification or even refinancing. But many will not be able to afford their mortgage payment or rather the home.
I suppose only time will tell. I would just hate to see things take a turn for the worst as I am not sure the economy has what it takes to pull itself back up from a double dip.
Cash for Keys
Lenders give thousands of dollars to homeowners who lose their home because of foreclosure. This foreclosure relocation assistance help homeowners cover the cost of moving out of their home and into another residence.
The amount paid to the homeowner or renter may vary from the amount of a thousand dollars to five thousand dollars. The program is also offered to real estate agents who gain a commission. They do so by lowering the amount paid out and keep the difference for themselves. It is wise to talk to the lender yourself to get the best amount available.
This financial aid for homeowners who lose home in foreclosure through cash for keys like programs are supposed to create good will, but is that the real motivation for the lenders?
Perhaps the reasons behind cash for keys and foreclosure relocation assistance is actually two fold.
The amount paid to the homeowner or renter may vary from the amount of a thousand dollars to five thousand dollars. The program is also offered to real estate agents who gain a commission. They do so by lowering the amount paid out and keep the difference for themselves. It is wise to talk to the lender yourself to get the best amount available.
This financial aid for homeowners who lose home in foreclosure through cash for keys like programs are supposed to create good will, but is that the real motivation for the lenders?
Perhaps the reasons behind cash for keys and foreclosure relocation assistance is actually two fold.
- One reason is to get the renter or homeowner to depart quickly. No one wants to sell a home that has old owners refusing to leave.
- Secondly to create an incentive to for the former occupants to resist damaging or destroying property out of spite against the lender.
HAFA - Foreclosure Alternative Help
HAFA is the Home Affordable Foreclosure Alternative program created for homeowners who can not afford to keep their home.
President Barrack Obama helped establish the program through his Making Homes Affordable Plan and it is for the homeowners who are not capable of making a payment even if those payments are reduced through the Home Affordable Modification Program.
Obama Foreclosure Alternatives
In that case the homeowner is offered other mortgage solutions that do not let the homeowner keep the home but allow them to walk away with no mortgage debt. This is done with a short sale or perhaps a deed in lieu.
Obama Cash for Keys Program
Along with the foreclosure alternative the homeowner is able to receive a few thousand dollars of foreclosure relocation assistance through the Obama cash for keys program. Typically the cash for keys program available through HAFA allows homeowners to obtain 3,000 dollars of financial aid.
President Barrack Obama helped establish the program through his Making Homes Affordable Plan and it is for the homeowners who are not capable of making a payment even if those payments are reduced through the Home Affordable Modification Program.
Obama Foreclosure Alternatives
In that case the homeowner is offered other mortgage solutions that do not let the homeowner keep the home but allow them to walk away with no mortgage debt. This is done with a short sale or perhaps a deed in lieu.
Obama Cash for Keys Program
Along with the foreclosure alternative the homeowner is able to receive a few thousand dollars of foreclosure relocation assistance through the Obama cash for keys program. Typically the cash for keys program available through HAFA allows homeowners to obtain 3,000 dollars of financial aid.
Foreclosure Relocation and Financial Assistance
Homeowners and renters alike are losing their homes at a rapid rate. These homeowners and renters must vacate their homes because of the home being sold due to a foreclosure sale. Many who lose their home in this manner are often left feeling vengeful and out of spite will cause damage to the home or property.
Lenders thought that angry complaints and phone calls from the former homeowner were the least of their problems and they were wrong. Former owners would get their revenge by trashing the home. A new risk management tactic was soon formed called Cash for Keys. Simply put, it is a program designed by lenders providing financial assistance to occupants who must depart and relocate elsewhere because of the foreclosure sale.
The agreement is usually fixed with conditions and requires the former homeowner or renter to agree then honor these terms and conditions including move out dates. If the former homeowners meet these terms and conditions, lenders will pay a lump sum of money to the evicted party.
Typical homeowners might be offered a monetary sum of twenty-five hundred dollars given if they vacate the foreclosed home within forty-five days and leave the residence in good condition. The program recognizes the financial hardship and relocation expense of those affected directly.
Lenders thought that angry complaints and phone calls from the former homeowner were the least of their problems and they were wrong. Former owners would get their revenge by trashing the home. A new risk management tactic was soon formed called Cash for Keys. Simply put, it is a program designed by lenders providing financial assistance to occupants who must depart and relocate elsewhere because of the foreclosure sale.
The agreement is usually fixed with conditions and requires the former homeowner or renter to agree then honor these terms and conditions including move out dates. If the former homeowners meet these terms and conditions, lenders will pay a lump sum of money to the evicted party.
Typical homeowners might be offered a monetary sum of twenty-five hundred dollars given if they vacate the foreclosed home within forty-five days and leave the residence in good condition. The program recognizes the financial hardship and relocation expense of those affected directly.
Thursday, January 27, 2011
Home Affordable Mortgage
There is a huge need for mortgage assistance amidst a growing population of homeowners in financial hardship. This need has not been over looked.
There are many government mortgage assistance programs and these efforts only seem to be growing in both number and level of effectiveness.
Below you will find a list of homeowner assistance programs developed to provide homeowners the opportunity to obtain beneficial debt help that enables them to make home affordable.
Home Affordable Mortgage Program List
Home Affordable Refinance
This is the Obama refinance program that allows homeowners to refinance their current mortgage to a home loan with a more favorable and affordable monthly payment
FHA Short Refinance
Allows underwater homeowners to reduce their principle by at least 10% by refinancing.
Second Mortgage Modification
Gives lenders incentives to eliminate second lien mortgage debt.
Home Affordable Modification
This is the Obama loan modification program that allows homeowners in financial hardship to lower their monthly mortgage payment by restructuring the payment terms of their home loan and thus make home affordable. This program allows homeowners to stop foreclosure and overcome mortgage default.
Unemployment Assistance and Modification Program
This government mortgage assistance program allows homeowners who are unemployed to obtain mortgage relief via forbearance and than modification
Obama Foreclosure Alternatives
Provides homeowners who have long term financial hardships that prevent them from being able to keep their home the opportunity to stop foreclosure and walk away with no mortgage debt. Foreclosure alternatives such as a deed in lieu of foreclosure or a short sale are utilized to help these homeowners. Participants are also granted up to 3,000 dollars of foreclosure relocation assistance through the Obama cash for keys program.
Hardest Hit Fund
This program provides billions of dollars to the local housing authorities of states that have been hit the hardest by financial hardship caused by the turmoils of the down economy.
There are many government mortgage assistance programs and these efforts only seem to be growing in both number and level of effectiveness.
Below you will find a list of homeowner assistance programs developed to provide homeowners the opportunity to obtain beneficial debt help that enables them to make home affordable.
Home Affordable Mortgage Program List
Home Affordable Refinance
This is the Obama refinance program that allows homeowners to refinance their current mortgage to a home loan with a more favorable and affordable monthly payment
FHA Short Refinance
Allows underwater homeowners to reduce their principle by at least 10% by refinancing.
Second Mortgage Modification
Gives lenders incentives to eliminate second lien mortgage debt.
Home Affordable Modification
This is the Obama loan modification program that allows homeowners in financial hardship to lower their monthly mortgage payment by restructuring the payment terms of their home loan and thus make home affordable. This program allows homeowners to stop foreclosure and overcome mortgage default.
Unemployment Assistance and Modification Program
This government mortgage assistance program allows homeowners who are unemployed to obtain mortgage relief via forbearance and than modification
Obama Foreclosure Alternatives
Provides homeowners who have long term financial hardships that prevent them from being able to keep their home the opportunity to stop foreclosure and walk away with no mortgage debt. Foreclosure alternatives such as a deed in lieu of foreclosure or a short sale are utilized to help these homeowners. Participants are also granted up to 3,000 dollars of foreclosure relocation assistance through the Obama cash for keys program.
Hardest Hit Fund
This program provides billions of dollars to the local housing authorities of states that have been hit the hardest by financial hardship caused by the turmoils of the down economy.
How to Get an Affordable Loan Modification
If you are a homeowner who wants to reduce their mortgage payment via the Obama mortgage modification program known as HAMP the Home Affordable Modification Program than you need to follow the step by step process listed below.
Qualify Yourself
The first step is to determine if you meet the basic qualifications for affordable mortgage modification program.
Preliminary HAMP Application
Next you need to obtain, complete, and submit the preliminary modification request application. This is what the government refers to as the Request for Modification Affidavit. This application is what starts the ball rolling and will get you into a HAMP trial modification.
Prepare Financial Package
With the initial application you should send a financial package that includes the following documents listed below.
Successfully Complete HAMP Trial Modification
You must make all your trial payments on time and respond to the packages and inquires your lender will send in the mail. Play it safe and utilize the envelopes and payment coupons provided.
Get Approval (or Unmentionable) Decision
Wait for lender to evaluate debt, income, financial hardship, and the like.
Qualify Yourself
The first step is to determine if you meet the basic qualifications for affordable mortgage modification program.
Preliminary HAMP Application
Next you need to obtain, complete, and submit the preliminary modification request application. This is what the government refers to as the Request for Modification Affidavit. This application is what starts the ball rolling and will get you into a HAMP trial modification.
Prepare Financial Package
With the initial application you should send a financial package that includes the following documents listed below.
- Tax Form 4506-EZ. This form allows your lender access to past tax returns you submitted to the IRS.
- Income documentation such as pay stubs and bank statements. Submit at least three months worth.
- Document certifying that you have not been convicted of felony larceny, fraud, forgery, money laundering, tax evasion, or the like in the past 10 years.
Successfully Complete HAMP Trial Modification
You must make all your trial payments on time and respond to the packages and inquires your lender will send in the mail. Play it safe and utilize the envelopes and payment coupons provided.
Get Approval (or Unmentionable) Decision
Wait for lender to evaluate debt, income, financial hardship, and the like.
Tuesday, January 18, 2011
Typical Reverse Mortgage Borrower
Are you considering a reverse mortgage loan?
If you are you may be wondering if you are a right fit for this particular type of mortgage product. As an effort to help folks dig into this question and find the correct answer for their unique situation I have given a brief and accurate description of the typical reverse mortgage borrower.
The typical reverse mortgage borrower is an elderly homeowner whom is in need of some cash and or cash flows. The borrower will initially own the home out right or owe very little. The borrower will live in the property secured by the reverse mortgage loan. Usually the borrower is single, widowed or divorced and lives alone.
If you are you may be wondering if you are a right fit for this particular type of mortgage product. As an effort to help folks dig into this question and find the correct answer for their unique situation I have given a brief and accurate description of the typical reverse mortgage borrower.
The typical reverse mortgage borrower is an elderly homeowner whom is in need of some cash and or cash flows. The borrower will initially own the home out right or owe very little. The borrower will live in the property secured by the reverse mortgage loan. Usually the borrower is single, widowed or divorced and lives alone.
What is a Reverse Mortgage Loan?
The reverse mortgage was created to help elderly homeowners who need to increase their income.
A reverse home loan is a backward operated mortgage product that pays the homeowner in exchange for the right to the equity value in the home has to offer up to the amount owed at the end of the loans life or term.
A reverse mortgage loan is a loan that can be either obtained in a lump sum, line of credit, or the traditional reverse mortgage installments. The equity in a home is reduced in accordance to the money borrowed an the costs incurred.
A reverse mortgage loan is a mortgage product that offers elderly borrowers a cash flow solution in the form of a secured loan.
A reverse mortgage is a non-recourse loan and debt. This means that only the value of the home may pursued as a source of repayment.
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Reverse Mortgage History
FHA Reverse Mortgage
A reverse home loan is a backward operated mortgage product that pays the homeowner in exchange for the right to the equity value in the home has to offer up to the amount owed at the end of the loans life or term.
A reverse mortgage loan is a loan that can be either obtained in a lump sum, line of credit, or the traditional reverse mortgage installments. The equity in a home is reduced in accordance to the money borrowed an the costs incurred.
A reverse mortgage loan is a mortgage product that offers elderly borrowers a cash flow solution in the form of a secured loan.
A reverse mortgage is a non-recourse loan and debt. This means that only the value of the home may pursued as a source of repayment.
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Reverse Mortgage History
FHA Reverse Mortgage
FHA Reverse Mortgage Equity Conversion Loan
FHA Reverse Mortgage
The FHA reverse mortgage loan is known as HECM – Home Equity Conversion Mortgage.
A FHA reverse mortgage is of course guaranteed by the FHA.
There are some general requirements that a borrower must meet in order to qualify for a FHA reverse mortgage loan. Below I have listed just the very basic FHA reverse mortgage qualifications for borrowers interested in utilizing this financial tool.
Qualifications for FHA Reverse Mortgage
Related Resources
How to Refinance and Lower Your Mortgage Payment
The FHA reverse mortgage loan is known as HECM – Home Equity Conversion Mortgage.
A FHA reverse mortgage is of course guaranteed by the FHA.
There are some general requirements that a borrower must meet in order to qualify for a FHA reverse mortgage loan. Below I have listed just the very basic FHA reverse mortgage qualifications for borrowers interested in utilizing this financial tool.
Qualifications for FHA Reverse Mortgage
- At least 62 years or older
- One - Four Unit dwellings
- Own the home, or the existing traditional forward mortgage is close to be paid off more specifically it can be paid with the proceeds obtained from the reverse mortgage loan.
Related Resources
How to Refinance and Lower Your Mortgage Payment
Reverse Mortgage History
History of the Reverse Mortgage
The reverse mortgage loan is a government inspired mortgage product designed to help elderly homeowners tap into their home equity with out the risk of losing their home.
HUD administered the program starting in the late 1980's. This was done through the Housing and Community Development Act of 1987
Initially a test run was approved in which 2500 mortgage insurance policies were authorized for issue. Three years later in 1990 which was actually closer to 1991 the Omnibus Budget Reconciliation Act of 1990 expanded and set in motion the modern day system used to insure reverse mortgage loans with FHA mortgage insurance.
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Thoughts on Mortgage Loans
Refinance - Lower Mortgage Payment
The reverse mortgage loan is a government inspired mortgage product designed to help elderly homeowners tap into their home equity with out the risk of losing their home.
HUD administered the program starting in the late 1980's. This was done through the Housing and Community Development Act of 1987
Initially a test run was approved in which 2500 mortgage insurance policies were authorized for issue. Three years later in 1990 which was actually closer to 1991 the Omnibus Budget Reconciliation Act of 1990 expanded and set in motion the modern day system used to insure reverse mortgage loans with FHA mortgage insurance.
Related Articles
Thoughts on Mortgage Loans
Refinance - Lower Mortgage Payment
Saturday, January 1, 2011
Thoughts on Sales and Sales People
A high performance sales person is one of the most valuable assets a company can have.
The purchase opportunity a consumer will pass up if left to their own isolated mind and will, the consumer will buy and pay twice the price if helped by a good sales person.
To better explore this notion let's take a look and explore some thoughts on home loan lending and the loan agent.
The loan agent for the modern day private lender is there for one reason. They are there to hold the borrowers hand, keep them happy, and most importantly to see them through the entire closing process. This is important because the borrower and home buyer has a lot to deal with. The never ending list of closing costs can be overwhelming and borrowers often want to back away as they become overwhelmed with all the financial obligations and contracts.
Because good sales people are hard to find and historically impossible to control, the typical employee to employer arrangement has proved a poor performance strategy.
Salary is a commitment and if the employer is wrong about the hired employee than they are out quite a bit of money. Sales people have a reputation of taking their own interest to the extreme. If they are guaranteed money this is gonna make managing them even worst. Why go the extra mile if there is no perceived self benefit?
Thus the commission has proven to be a great fit for the marketing and sales side of business operations.
Sales people are also good at extracting the highest price tolerable by any one given borrower. Thus loan origination points are a great match for originating loans. The sales guy is able to pull huge commissions and thus make a fruitful living and the lender carries zero risk.
By giving sales people a optional margin and commission take depending on the price obtained for any given product a company is able to give their sales reps greater opportunity for tremendously less risk. The price and risk is passed on to the consumer. If the consumer or borrower negotiates the price down to the bare minimum than they have avoided the extra cost of the reps allowable premium. The rep in this scenario still gets a commission. The commission is not as high as it could have been if they were able to get the consumer to purchase the product for a higher premium.
Sales people learn to live and cope with this uncertainty.
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Understanding Risk and the Certainty of Uncertainty
The purchase opportunity a consumer will pass up if left to their own isolated mind and will, the consumer will buy and pay twice the price if helped by a good sales person.
To better explore this notion let's take a look and explore some thoughts on home loan lending and the loan agent.
The loan agent for the modern day private lender is there for one reason. They are there to hold the borrowers hand, keep them happy, and most importantly to see them through the entire closing process. This is important because the borrower and home buyer has a lot to deal with. The never ending list of closing costs can be overwhelming and borrowers often want to back away as they become overwhelmed with all the financial obligations and contracts.
Because good sales people are hard to find and historically impossible to control, the typical employee to employer arrangement has proved a poor performance strategy.
Salary is a commitment and if the employer is wrong about the hired employee than they are out quite a bit of money. Sales people have a reputation of taking their own interest to the extreme. If they are guaranteed money this is gonna make managing them even worst. Why go the extra mile if there is no perceived self benefit?
Thus the commission has proven to be a great fit for the marketing and sales side of business operations.
Sales people are also good at extracting the highest price tolerable by any one given borrower. Thus loan origination points are a great match for originating loans. The sales guy is able to pull huge commissions and thus make a fruitful living and the lender carries zero risk.
By giving sales people a optional margin and commission take depending on the price obtained for any given product a company is able to give their sales reps greater opportunity for tremendously less risk. The price and risk is passed on to the consumer. If the consumer or borrower negotiates the price down to the bare minimum than they have avoided the extra cost of the reps allowable premium. The rep in this scenario still gets a commission. The commission is not as high as it could have been if they were able to get the consumer to purchase the product for a higher premium.
Sales people learn to live and cope with this uncertainty.
Related Articles
Understanding Risk and the Certainty of Uncertainty
Simple Thoughts On Mortgage Lending
When you take out a home loan you are literally buying a dollar for three dollars. By the time you are done paying the mortgage you will have paid the lender three times the money they lent you. This is how most businesses work.
Businesses purchase inputs, transform them into an output that is worth more. Business operations create value through this transformation process.
Lenders find people who need more money than they could possibly come up with themselves by the time they need it. This person is the borrower. They also find people who have more money than need during this same short term window. The lender than connects these two. They act as a broker.
Lending money is easy. Managing the risk of losing money in a way that consistently yields more return than loss is the trick.
Thus the real trick that lenders typically and historically do so well is to find opportunities to loan money to those who will do their best to pay back that money plus interest over a period time. One payment at a time. They do this by finding folks with steady consistent income that have a history of paying their bills and following through with their past financial obligations.
Middle class consumers who are the typical mortgage borrowers are by themselves to risky to be trusted with such a sizable loan over such a long period of time. A lot can happen in thirty years.
The asset being purchased with the loan is what creates the security for the lender and allows the American dream to be more than a dream. The fact that the lender is able to obtain the right to force a sale of the property secured by the mortgage loan is what allows the American dream to become an American reality.
Related Articles
How Homeowners Stop Foreclosure
Home Buyer Considerations
Business Basics - Understanding the Certainty of Uncertainty
Businesses purchase inputs, transform them into an output that is worth more. Business operations create value through this transformation process.
Lenders find people who need more money than they could possibly come up with themselves by the time they need it. This person is the borrower. They also find people who have more money than need during this same short term window. The lender than connects these two. They act as a broker.
Lending money is easy. Managing the risk of losing money in a way that consistently yields more return than loss is the trick.
Thus the real trick that lenders typically and historically do so well is to find opportunities to loan money to those who will do their best to pay back that money plus interest over a period time. One payment at a time. They do this by finding folks with steady consistent income that have a history of paying their bills and following through with their past financial obligations.
Middle class consumers who are the typical mortgage borrowers are by themselves to risky to be trusted with such a sizable loan over such a long period of time. A lot can happen in thirty years.
The asset being purchased with the loan is what creates the security for the lender and allows the American dream to be more than a dream. The fact that the lender is able to obtain the right to force a sale of the property secured by the mortgage loan is what allows the American dream to become an American reality.
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How Homeowners Stop Foreclosure
Home Buyer Considerations
Business Basics - Understanding the Certainty of Uncertainty
How to Refinance and Lower Your Monthly Payment
This article is a step by step guide on how to refinance and lower your mortgage payment. It is intended for homeowners who need to lower their monthly payments in order to stay current on their home loan.
I have another post in which I describe what borrowers are the best match for this particular mortgage payment solution. I suggest you make sure you are a good fit for refinance help to lower your payment before you move forward.
Below I have created a list of nine steps to take in order to refinance and lower your monthly mortgage payment.
Steps to Refinance and Lower Your Mortgage Payment
I have another post in which I describe what borrowers are the best match for this particular mortgage payment solution. I suggest you make sure you are a good fit for refinance help to lower your payment before you move forward.
Below I have created a list of nine steps to take in order to refinance and lower your monthly mortgage payment.
Steps to Refinance and Lower Your Mortgage Payment
- Create monthly budget.
- Write hardship letter.
- Income and tax documents.
- Call your lender.
- Ask about refinancing options for distressed borrowers.
- Complete financial package that they request.
- Submit financial package.
- Follow up to make sure they received it and ask when to expect a reply.
- Wait for approval.
Refinance Help - Lower Mortgage Payment
Many homeowners, who are still current on their mortgage, are worried about making their next monthly mortgage payment on time. Some will be able to make the next payment, but they know that something has to be done in the near future, or they will default.
These homeowners need help making home affordable for the long term.
If you are a homeowner who has found yourself amidst a financial hardship during these slow economic times than you know of the stress and worry it brings to your life.
If you are dealing with this stress, if you are a homeowner who knows you have to do something or you will eventually default on your mortgage, than be sure to read the rest of this post.
You can refinance your mortgage to a loan with more favorable terms. You can lower your monthly payment.
Characteristics of Homeowners who May Be Able to Lower Their Mortgage Payment by Refinancing
Those are only generic qualifications. If you are interested in a specific program than you need to reference the applicable qualifications for that refinance program of interest.
If you are a homeowner who meets this basic borrower profile than you may be able to refinance and lower your mortgage payment.
Where to Go From Here
If you want to explore this opportunity or move forward towards refinancing your mortgage loan than I suggest taking a look at another recent article of mine that lists all the steps involved in refinancing your loan to lower your mortgage payment. The post is titled and linked below...
How to Refinance and Lower Your Monthly Payment
These homeowners need help making home affordable for the long term.
If you are a homeowner who has found yourself amidst a financial hardship during these slow economic times than you know of the stress and worry it brings to your life.
If you are dealing with this stress, if you are a homeowner who knows you have to do something or you will eventually default on your mortgage, than be sure to read the rest of this post.
You can refinance your mortgage to a loan with more favorable terms. You can lower your monthly payment.
Characteristics of Homeowners who May Be Able to Lower Their Mortgage Payment by Refinancing
- They have at least 9 - 12 percent of home equity that has accumulated.
- They are still current on their mortgage payments.
Those are only generic qualifications. If you are interested in a specific program than you need to reference the applicable qualifications for that refinance program of interest.
If you are a homeowner who meets this basic borrower profile than you may be able to refinance and lower your mortgage payment.
Where to Go From Here
If you want to explore this opportunity or move forward towards refinancing your mortgage loan than I suggest taking a look at another recent article of mine that lists all the steps involved in refinancing your loan to lower your mortgage payment. The post is titled and linked below...
How to Refinance and Lower Your Monthly Payment
Thursday, December 16, 2010
Amidst the Ash of Subprime
A New Borrowing Era - Post Subprime
Following the subprime mortgage crisis, and the political and economic changes that it has caused, will you be able to rely on your mortgage broker?
This is an important question for potential home buyers to ask themselves because mortgage brokers and lending agents were a cause of the mortgage and foreclosure crisis.
Irregularities in subprime lending have played a large role in the current economic crisis.
Many mortgage brokers that forced borrowers to forge documents and escalate income levels to enable borrowers to qualify for a mortgage that they weren't eligible for. Theses borrowers took a home loan that they could not afford.
As a result these homeowners were the first to fall behind and lose their home to foreclosure.
If you are planning to take out a mortgage and you are not a financial expert, you can and should seek financial advice from a professional.
Just the same you want to make sure that you have some basic knowledge
It is important for you to be aware of the terms and conditions you are agreeing to at closing. Borrowers that have fallen prey to misleading mortgage brokers could have easily avoided such mistakes by taking the time to understand the mortgage terms on their own.
Be careful and don't allow yourself to be taken for a ride that results in you losing your home through a mortgage foreclosure sale.
Following the subprime mortgage crisis, and the political and economic changes that it has caused, will you be able to rely on your mortgage broker?
This is an important question for potential home buyers to ask themselves because mortgage brokers and lending agents were a cause of the mortgage and foreclosure crisis.
Irregularities in subprime lending have played a large role in the current economic crisis.
Many mortgage brokers that forced borrowers to forge documents and escalate income levels to enable borrowers to qualify for a mortgage that they weren't eligible for. Theses borrowers took a home loan that they could not afford.
As a result these homeowners were the first to fall behind and lose their home to foreclosure.
If you are planning to take out a mortgage and you are not a financial expert, you can and should seek financial advice from a professional.
Just the same you want to make sure that you have some basic knowledge
It is important for you to be aware of the terms and conditions you are agreeing to at closing. Borrowers that have fallen prey to misleading mortgage brokers could have easily avoided such mistakes by taking the time to understand the mortgage terms on their own.
Be careful and don't allow yourself to be taken for a ride that results in you losing your home through a mortgage foreclosure sale.
Home Buyer Considerations
Mortgage lending has been the catalyst and factor allowing most of today's homeowners to own their home. Depending on your personal finances you also may one day take out a mortgage. In which case there are several factors that home buyers should consider before buying a home and taking out a mortgage. This article contains essential mortgage questions home buyers should consider when obtaining a mortgage.
Financial Questions Home Buyers and Mortgage Borrowers Should Seriously Consider
Are you comfortable with the Mortgage loan term (15 yr - 30 yr)?
You have to decide whether you will opt for a 15-year or a 30-year loan term.
If you are opting for the 15-year loan term you have to make higher monthly payments but the rate of interest will be lower.
When you opt for 30-year loan term, you pay lower monthly payments but the rate of interest will be high. You get more time to pay off your mortgage.
Adjustable Rate or Fixed Rate?
If you opt for an adjustable-rate mortgage, your monthly mortgage payments will be less in the first few years. The rates will change as per the prevailing rates in the market. Thus your monthly mortgage payments will also differ.
If you opt for fixed-rate mortgage, your monthly mortgage rates will be fixed and predictable. This may make it easier for you to keep up with your financial obligations and stick to your monthly budget.
Does your income support the size of the mortgage?
Your income is undoubtedly an important factor that determines what size and type of a mortgage you can afford. It is important that you live within your means.
What is your debt to income ratio?
Your DTI or debt to income ratio is another factor that can help you to decide how much mortgage you should take out. The more debt you have the less you should consider borrowing.
What is Your Credit Score?
Your credit score has a big impact on the cost of borrowing. The better your credit report and credit score the better and more favorable your financing options will be.
If you think you will be able to improve your credit score in the short term then it may be worth the wait.
How big of a down payment can you afford?
The down payment that a home buyer is both willing and able to make is one of the most important factors considered by lenders.
The bigger the down payment is the cheaper the financing costs will be.
Is buying a home the best use of those funds?
There is no question that owning a home is one of the most beneficial purchases that people make. However before you purchase a home you still need to weigh the pro's and con's of the purchase as well as the opportunity cost.
Financial Questions Home Buyers and Mortgage Borrowers Should Seriously Consider
Are you comfortable with the Mortgage loan term (15 yr - 30 yr)?
You have to decide whether you will opt for a 15-year or a 30-year loan term.
If you are opting for the 15-year loan term you have to make higher monthly payments but the rate of interest will be lower.
When you opt for 30-year loan term, you pay lower monthly payments but the rate of interest will be high. You get more time to pay off your mortgage.
Adjustable Rate or Fixed Rate?
If you opt for an adjustable-rate mortgage, your monthly mortgage payments will be less in the first few years. The rates will change as per the prevailing rates in the market. Thus your monthly mortgage payments will also differ.
If you opt for fixed-rate mortgage, your monthly mortgage rates will be fixed and predictable. This may make it easier for you to keep up with your financial obligations and stick to your monthly budget.
Does your income support the size of the mortgage?
Your income is undoubtedly an important factor that determines what size and type of a mortgage you can afford. It is important that you live within your means.
What is your debt to income ratio?
Your DTI or debt to income ratio is another factor that can help you to decide how much mortgage you should take out. The more debt you have the less you should consider borrowing.
What is Your Credit Score?
Your credit score has a big impact on the cost of borrowing. The better your credit report and credit score the better and more favorable your financing options will be.
If you think you will be able to improve your credit score in the short term then it may be worth the wait.
How big of a down payment can you afford?
The down payment that a home buyer is both willing and able to make is one of the most important factors considered by lenders.
The bigger the down payment is the cheaper the financing costs will be.
Is buying a home the best use of those funds?
There is no question that owning a home is one of the most beneficial purchases that people make. However before you purchase a home you still need to weigh the pro's and con's of the purchase as well as the opportunity cost.
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