Archive for October, 2009

I’m confused. . . . . . . . I’ve heard that the tax rebate will be like additional income that you will be taxed on, but then I’ve also heard its just basically an advance on next years tax refund?
Anyone know what it is?
THANKS!

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It’s not very often that a borrower takes into heavy consideration what his loan to value is when shopping for a loan.   In fact, if the subject is brought up by the customer, it’s mostly in relation to avoiding paying monthly mortgage insurance.   But sometimes, a loan to value can affect even more aspects of your loan – like pricing and approval! What is loan to value?  Well, it’s exactly what it says.   The loan amount compared to the value of the home you are buying or refinancing.   For example, if you are buying a $100,000 home, and your loan amount is only $50,000, your loan to value or “LTV” is 50%.   It’s also very common to refinance a home to obtain a lower LTV and drop mortgage insurance that was before required. Different types of loans have different minimum requirements for LTV’s.    With primary residence buys, for instance, an FHA loan can have as high as a 97. 75% LTV (soon to change to 96. 5% in 2009).   A conventional loan can have as high as a 97% LTV (but more common is 95% LTV).   VA and Rural Housing loans can have 100% LTV’s.   People who have cash to place down on the property they are buying and financing with a conventional loan oftentimes try to amass 20% of the buy price in order to avoid mortgage insurance.   Mortgage insurance is required when your LTV for a primary residence is above 80% and is issued by independent mortgage insuring companies like Genworth Financial or PMI.   Fannie and Freddie, the huge purchasers of conventional loans, will require one of these or other approved companies issue mortgage insurance unless the loan has an 80% LTV.   And if you’re refinancing the home you live in?  The whole grid of acceptable LTV’s changes for the most part, with a few exceptions.   And furthermore, if you’re talking about investment properties, it’s another can of worms. But when else does LTV mean something?  Consider when a loan specialist prices your loan.   Oftentimes there are pricing differentials based upon the loan to value.   For instance, if you carry mortgage insurance and your LTV is 85. 01% or higher, you might really get a better interest rate than if you had an 85% LTV (but don’t get too excited because your monthly mortgage insurance will be higher).   Or if your LTV is 60% or lower, you might also get a better interest rate.   If you are close to tipping the scales on one of these ratios, it may be to your benefit to question your loan specialist how close you are to a pricing break one way or another.   You’d be surprised to find out it might change your mind as to how much money you choose to place down on your loan.   And guess what else?  A low loan to value may be the difference between loan approval and loan denial.   Why is that?  Because if you are investing enough of your own money into the equity of a property, chances are you won’t default on the loan.   And if you do, it’s probably a last recourse.   Not to mention, the lender who holds the note won’t lose money because there is enough equity in the property to cover foreclosure costs, re-sale costs and any value loss from an upside down market.   The lender is covered.   So, the lender will consider the loan less risky and a higher debt to income ratio is tolerated when reviewed with a high credit score.  

The surge of borrowers looking for Mortgage Refinance has made somewhat of a phenomenon during uncertain economic times. Mortgage rates have dropped below 6% after the Federal Reserve announced its plot to buy mortgage-backed securities to loosen the tight hold on consumer lending.

The Government has initiated buying the mortgage-backed securities as of this week and has reduced rates further. This has contributed even more to the mortgage finance business and has added to the struggle lenders are currently experiencing not long after the financial downturn forced lenders through a layoff period.

It has been reported that consumers contacting lenders for mortgage refinance have been unable to speak to a live person and are only left with the option of leaving a message for a return phone call. Some frustrated consumers are unable to simply leave a message as lender mailboxes and voicemail are unable to handle the call volume, not to mention the mortgage refinance agents.

The sudden drop in rates is proof enough the mortgage finance surge has found lenders under-prepared during a time when they could really maximize on the opportunity to make up for the lull in previous months. With unexpected delays in applications following up with prospective customers, understaffed lenders scurry to service consumer requests for mortgage refinance.

Lenders are pulling staff from other departments to handle the demand for mortgage refinance. Consumers are worried about the possibility of rates going back up before they can lock in. The history of fluctuating rates proves there is fantastic chance this could happen as it is possible it can change from one hour to the next.

When a consumer is told it could be two weeks before they can get back to you about mortgage refinance, I believe the best advice to give in this situation would be to contact as many lenders as it takes. Be in touch with someone that can really get to the point of locking in the rate quicker than the rest, without compromising everything else that encompasses processing the loan.

When a prospective customer is told to apply on the Web after finally getting through to a live person, it becomes obvious it is time to be a small more aggressive in approach. For those consumers that do manage to reach a lender it would be wise to know the most recent rate available. Some online lending sites have not posted the best rates for dread of being bound by them.

Now is a excellent time to be in touch with connections directly related to the lending industry or connections with a real estate agent that can act as a liaison between the lender and customer looking for a mortgage refinance. Keep in mind there is a excellent possibility the lender may not answer at all to the message or when the online application was submitted. With business booming for lenders, it would be smart to pursue and secure that magic number before it is lost.

Madeline Hernandez
http://www.articlesbase.com/finance-articles/mortgage-refinance-has-lenders-overwhelmed-747812.html