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Do You Qualify for the Making Home Affordable Program?

By Kat DeLong

Are your monthly mortgage payments increasing due to an unconventional loan? Is a job loss or frequent medical bills making it impossible for you to pay your mortgage every month? If so, the first step is to take a deep breath and find out if you qualify for relief with the government’s Making Home Affordable Program.

As part of the stimulus plan, the program was introduced by President Obama on February 18, 2009 to help struggling borrowers keep their payments current and avoid foreclosure. There are two main parts to the Making Home Affordable Program: a modification program and a refinance program. Your circumstances will determine which part of the program is right for you, but let’s take a look at each.

 

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Making Home Affordable Modification Program

The modification program offers lenders $75 billion in incentives to help borrowers pay current interest rates plus points and fees. If you can no longer afford your Are your monthly mortgage payments increasing due to an unconventional loan? Is a job loss or frequent medical bills making it impossible for you to pay your mortgage every month? If so, the first step is to take a deep breath and find out if you qualify for relief with the government’s Making Home Affordable Program.

As part of the stimulus plan, the program was introduced by President Obama on February 18, 2009 to help struggling borrowers keep their payments current and avoid foreclosure. There are two main parts to the Making Home Affordable Program: a modification program and a refinance program. Your circumstances will determine which part of the program is right for you, but let’s take a look at each. mortgage payments but can answer yes to the following questions, you may qualify for the Making Home Affordable Modification Program:

  • Are you using the home as your primary residence?
  • Do you owe less than $729,750 on the first mortgage?
  • Have experienced a hardship that increased your expenses, an increase in your payments or a reduction in your income?
  • Did you get your first mortgage on or before January 1, 2009?
  • Do you have a first mortgage payment (including interest, taxes, insurance and homeowners association dues) that is more than 31% of your gross monthly income?

Making Home Affordable Refinance Program

The refinance program allows borrowers who owe more than their home is worth to refinance to market rates, but it may not be used for a cash-out refinance.

If you can answer yes to the following questions, you may be eligible for this program:

  • Are you current on your payments, meaning that you have not been more than 30 days late on a payment in the last 12 months?
  • Are you refinancing a building with 1-4 units?
  • Do you have a loan guaranteed by Fannie Mae or Freddie Mac?
  • Do you owe less than 125% of the current value of your home on the first mortgage?

If you think you qualify for one of these programs, contact your loan servicer immediately. In the meantime, gather your tax returns, income statements, mortgage statements, credit card balances, balances you carry on other debts and a hardship affidavit if you apply for the modification program.

Important Notes

  • Applying for either of these two programs is free, so beware of anyone charging fees for modifications or refinancing under this plan.
  • The government is scheduled to end both programs in June of 2010. If you think you qualify, act now!
All About Insurance

The Truth about the Truth in Lending Act

By Kat DeLong

When you sign up for a new credit card or buy a house, you are faced with pages and pages of small print – do you really read all of it? The answer is probably “no.” Even though you may not go through the whole stack of paper as you sign here and initial there, some fine print should not get overlooked. Thanks to the Truth in Lending Act (TILA), the loan documents must contain the vital information you need

 

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The TILA Defined

Originally passed by congress in 1968, the TILA is a uniform way for lenders to present the terms of a consumer loan so that borrowers can make informed choices and compare costs equally between lenders. This act covers both “closed ended” loans, such as a car loan or mortgage that you pay back over a specified period of time, and “open ended” loans, such as credit cards.

 

Material Disclosures

While the Truth in Lending Act covers necessary information, these five material disclosures must always be included:

  1. The Annual Percentage Rate (APR). This is the percentage listing of the cost of credit that includes all of the finance charges. This is different from the interest rate that is quoted elsewhere in the documents. When all of the charges are included, a loan with an interest rate of 17% may actually have an APR of 25%.
  2. Finance Charges. This is the dollar amount that is the cost of the credit over the life of the loan. This amount will include all interest, points and preparation fees.
  3. Amount Financed. This disclosed amount will take the principal amount of the loan and subtract finance charges. For example, if you finance $200,000 and carry five points ($10,000), the amount financed would be $190,000.
  4. Schedule of Payments. The schedule will tell you the day the payment is due and the dollar amount due for the life of the loan.
  5. Total of Payments. The total dollar amount that the loan will cost you as long as the scheduled payments are made on time.

 

New Provisions for the TILA

Recent changes to the TILA address some discrepancies found in so-called “higher-priced mortgage loans.” These changes strengthened parts of the TILA relating to practices viewed as unfair or deceptive. They offer key protection for borrowers including ending the practice of lending money without considering the borrower’s income or ability to repay the loan and put conditions on prepayment penalties.

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All About Insurance

Mortgages and Equity Loans: What’s the Difference?

By Kat DeLong

Mortgages, equity lines of credit, second mortgages – these terms are often tossed around by lenders, but do you know what they really mean? It may seem like Homebuying 101, but knowing the difference between these types of loans is a crucial part of making your first home purchase or improving the one you live in right now.

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Types of Mortgage Loans

A mortgage is a loan secured by some sort of real estate – it can be your primary residence or a home you purchase for an investment. Once you get the loan from your lender, you pay it off in installments over a set period of time, usually 15, 20 or 30 years. While lenders write all kinds of loans, including reverse mortgages and those that have “balloon” payments, they can be divided into two basic types:

  • Fixed Rate. A fixed rate mortgage gets the interest rate at the time the loan is written, so you pay the same amount of money every month for the life of the loan. These types of loans are the most common mortgages written today, and they have the safety of knowing that the payment amounts won’t change. On the other hand, because the interest rate is fixed, even if rates drop, the payments will stay the same unless you refinance the mortgage. Rates for a fixed-rate loan may also run higher than other types of mortgages.
  • Adjustable Rate. Also called an ARM, this type of loan starts with a lower interest rate and lower payments for an introductory period of time, but then “adjusts” periodically, usually causing an increase in payments. Adjustable rate loans often have a “cap,” which limits how much the rate can increase during the life of the loan. These mortgages seem best for those who only plan to own the property for a short period of time.

Types of Equity Loans

Equity loans (also called second mortgages) are loans secured by the equity, or the amount the property is worth over and above the money owed on the mortgage. If your home is worth $200,000 and you owe $150,000 on your mortgage, you have $50,000 in equity.

You can get an equity loan as a lump-sum amount of money, and then make payments on the principal and interest of the whole amount, or you can get an equity line of credit. A line of credit is an approved amount of money that you can access by writing a check or using a credit card as you need it, so you only pay for that portion of the loan that you actually use. The payments for equity loans are based on the amount owed and the current interest rate, so they can fluctuate as the rates go up and down.

Despite what you might hear in the news, lenders are still writing mortgages and equity loans for borrowers who qualify. If you need money to buy a home or build that kitchen of your dreams, get started. RateMarketplace can help.

All About Insurance, Homeowners Insurance, News

Homeownership Rates Continue to Decline As Rentals Soar

CNBC reported on Tuesday that homeownership rates continue to decline to historic lows as rentals soar.

According to the news source, the homeownership rate has dropped to 63.4 percent, which is the lowest number we’ve seen since 1967.

Rental prices, meanwhile – as well as the demand for rental properties – continue to skyrocket.

“Our results for the second quarter and year to date exceeded our original outlook,” noted Tim Naughton, chairman and CEO of AvalonBay, one of the nation’s largest apartment REITs, in the company’s second-quarter earnings release out Monday. “For the balance of the year, we expect accelerating apartment demand to support stronger performance across our business.”

Image via wikimedia/Bhtucker

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Homeowners Making the Shift to Condos

 

When the S&P/Chase-Shiller home prices indices report for April was released at the end of last week, it showed strong gains in the construction of new housing, with 34 percent of housing starts coming in the form of apartments and condos.

The good news, though, is that despite the shift toward condo living, prices for such housing units is not expected to rise.

“While the shift in consumer preferences for condos versus single family homes seen in the housing starts data may be a change in people’s housing preferences or housing affordability, it does not appear to be changing the patterns of price movement,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones. “Moreover, the shift to condominiums isn’t likely to make home prices more or less volatile than in the past. It certainly won’t reduce the risk of another housing boom-bust cycle in the future.”

Image via wikipedia/William Cho

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NJ Senator Menendez Proposes Bill to Help Homeowners Nationwide Avoid Foreclosure

New Jersey Senator Robert Menendez proposed a brand new bill on Tuesday that would aim to help homeowners nationwide avoid going into foreclosure.

Specifically aimed at individuals and families across the country who owe more than their house is worth, the bill seeks to create a program in which banks would reduce the mortgage principal for eligible homeowners.

“My bill aims to give homeowners the break they need by working with banks to find acceptable solutions for everyone,” Menendez said. “Not only can we help families stay in their homes, we can mitigate the impact zombie foreclosures have on our communities and our economy.”

Image via flickr/www.GlynLowe.com

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Housing Market Looking Healthy, According to New Indicator

Nationwide revealed on Tuesday that the future of the housing market is looking more promising than ever, with little chance of a downturn over the next year.

The news comes as the insurance and financial services organization has just released its brand new housing market indicator, the Leading Index of Health Housing Markets, which is “a data-driven view of the near-term performance of housing markets based upon current health indicators for the national housing market and 373 metropolitan statistical areas (MSAs).”

“Unlike most other housing indices or surveys, the HoHM Report provides a look into the future instead of the rearview mirror,” said David Berson, Nationwide’s chief economist and senior vice president. “The quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”

Image via flickr/Pictures of Money

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Report: Millions of Homeowners Still ‘Underwater’

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According to a new report released by CoreLogic on Tuesday, millions of homeowners in the United States remain underwater on their mortgages – a “nagging leftover” from the housing crash.

As CNBC explains, 5.4 million homes – or 10.4 percent of all homes with a mortgage – are still in a negative equity position.

“Negative equity continued to be a serious issue for the housing market and the U.S. economy,” said Anand Nallathambi, president and CEO of CoreLogic. “We expect the situation to improve over the course of 2015.”

Image via flickr/American Advisors Group

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NAHB Chairman Responds to Obama’s FHA Announcement

National Association of Homebuilders (NAHB) chairman Kevin Kelly released a statement on Thursday applauding President Barack Obama and the FHA for lowering annual mortgage insurance premiums.

“NAHB commends the President for taking action to reduce FHA’s annual mortgage insurance premiums by 50 basis points to 0.85 percent,” Kelly said. “Lower premiums will make home loans more affordable for qualified borrowers, particularly first-time buyers, and help to alleviate tight credit conditions in the mortgage market. This prudent course reflects a recent actuarial report that FHA is back in black and strengthening its financial health. The new premium structure will allow FHA to continue building its reserves.”

Image via Getty Images – Chip Somodevilla

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