Filing Bankruptcy to Stop Foreclosure?

 

Some homeowners facing foreclosure are considering filing bankruptcy. Even though this might be an option for some people, there are a lot of other things you should try before filing bankruptcy to stop foreclosure.

 

The first thing you need to do is contact your mortgage lender. The sooner you do this the better. It's best to contact your lender as soon as you realize you might miss a payment. not after you've already missed one or two. Then your mortgage lender will be more likely to negotiate other options with you so you will not have to consider filing for bankruptcy.

 

Some of the possibilities you can try to negotiate with your lender would be reinstatement, forbearance, or a repayment plan, all of which are options if your money problems are temporary. If your money problems are not temporary, before you can try to negotiate with your lender to get a mortgage modification or a partial claim.

 

If none of these solutions will work for you and you won't be able to keep your home, before filing bankruptcy to stop foreclosure you should try to sell your home, or see if the mortgage company will allow assumption, a pre-foreclosure sale or short sale, or the deed-in-lieu of foreclosure.

 

All of these options require you to work with your current mortgage lender. If your mortgage lender is not willing to negotiate with you, you can try calling a HUD approved foreclosure counseling agency to get some assistance going over your options. These are usually free.

 

If at all possible you should avoid filing for bankruptcy as this will impact your credit rating and make things difficult for you in the future. Filing bankruptcy to prevent foreclosure is also not an option for everyone, and not all types of bankruptcies actually stop foreclosure.

 

A Chapter 13 Bankruptcy can stop foreclosure, so if you are thinking of filing bankruptcy, you should check to see if you quality for this type of bankruptcy, as not everyone does.

 

Be advised that filing bankruptcy to stop foreclosure won't mean you no longer have to make any payments on your house. A part of Chapter 13 Bankruptcy is a payment plan to pay off at least part of the money you owe to creditors such as your mortgage lender.

 

Remember, don't wait until you've already missed a payment or two before talking to your mortgage lender. Do it early!

 

 

 

Mortgage Points: Why Pay For Them?

 

If you are in the market for a home or considering refinancing your current mortgage, you probably have heard your mortgage professional talking about points. They may advise you to buy points or they may advise you not to, depending on your situation. The question is, do you really understand points and when it makes sense to buy points?

 

A point is 1% of the loan amount. So, one point on a $100,000 mortgage costs $1,000. Points can be purchased in increments down to an eight of a point. It's not any more complicated than that. When should you buy mortgage points?

 

The pros of doing this are really pretty easy to understand. By pre-paying your interest, you get a lower rate and therefore a lower payment for the life of your loan. The cons of buying points are that you must stay in the home for a certain period before you "break even" on the transaction.

 

For example, if you have a $200,000 mortgage and you buy two points, you will pay $4,000 for those points at closing. If buying the points lowers your payment $250 a month, you'll need to stay in your house at least 16 months to break even (16 × 250 = 4000). In this example, after 16 months you'll start making money. After several years, you'll save a lot of money.

 

One other thing to keep in mind about buying points up front: Points may be tax deductible, so there is an added benefit if you qualify for the tax deduction. Check with your tax advisor before you deduct points on your taxes.

 

If you have any questions or comments about points, just click the comment link below and sound off. We'll get back to you with answers to any questions you might have. We'd love to hear from you.

 

 

 

Tips for Homeowners Nearing Foreclosure

 

Some homeowners who are three months to a year behind on their mortgages have chosen to leave their homes altogether. Anyone can walk away from a house — even a retired baseball great, Jose Canseco, who abandoned his Encino (Calif.) property earlier this year.

 

But attractive as "just walking away" may seem to a homeowner at the end of his or her financial tether, leaving a property to the mortgage-holder or other interested parties carries a serious credit risk and significant legal responsibility.

 

We've touched on this topic several times in the past on this blog, but wanted to hit it again to help some who may be thinking in the wrong direction.

 

It's a good idea to call the person you may least want to talk to: The lender. Cash-strapped homeowners can get forbearance from their lender if they act early. This agreement reduces or suspends the mortgage payment for a limited time, giving homeowners a temporary reprieve.

 

A forbearance is not the same as loan forgiveness. Ultimately the mortgage payments have to be reinstated, and anywhere from three to six months of missed payments have to be accounted for. The very lucky — and reasonably well-off — can pay off the amount accumulated during forbearance in one lump sum. But for those who still find themselves in short-term financial trouble, most lenders offer specialized payment plans in which the borrower agrees to add a portion of the missed payments to the mortgage until the account is current.

 

Speaking directly to a lender seems logical enough. But surprisingly, homeowners who struggle and fail to meet their mortgage payments month after month rarely contact their lenders. And the further they fall behind, the less likely they are to reach out for help.

 

We've said this before, and we say it again now.  Walking away from a mortgage severely damages your credit and is not a good solution. If you're in trouble, TALK TO YOUR LENDER!

 

There are other ways to solve things and prevent ruining your financial future as opposed to walking away from your mortgage. Talk to us. We'll help you in any way we can with ideas and suggestions you can try.

 

 

 

Mortgage Rates Lower on Jumbo Loans

 

Congress has lifted the conforming loan limits in thousands of counties across the country. The government is allowing mortgage giants Fannie Mae and Freddie Mac to buy more — and larger – loans. And the FHA has rolled out its jumbo loan.

 

So what does it all mean for you? Well, if you’re a homeowner, or even thinking about becoming one, you may just find it’s easier to get approved for a loan.

 

Here’s why:

Let’s start with higher conforming loan limits.

 

The conforming loan limit is the maximum amount you can borrow before your mortgage is considered a jumbo loan, and therefore subject to higher interest rates because you’re now considered at a greater risk of defaulting.

 

$417,000 was the conforming loan limit across the country, regardless of where you lived. But, now that credit guidelines are much tighter, people living in areas where the average home value exceeds the $417,000 limit – like California – were having a heck of a time getting loans. And even if they could find one, the interest rate was so high, most folks were priced out of the market.

 

Congress did away with the flat conforming loan limit of $417,000. They replaced it with a new system where the loan limit for each county is based on its average home value.

 

The new limit is either $729,750 or 125% of the average home value – whichever is less for each individual county.

 

You can now get a jumbo loan with a rate that is just an eighth to a quarter-point higher than on a conventional mortgage, as compared to a full percentage point before the change.

 

 

 

Reverse Mortgages: How Do They Work?

 

Reverse Mortgages are exploding in popularity and as more and more baby boomers reach age 62 and beyond they will become eligible to cash in on their home equity with a reverse mortgage.

 

A reverse mortgage is a home loan you don't have to pay back for as long as you live in your home. It can be paid to you in one lump sum, as a regular monthly income, or at the times and in the amounts you prefer. The loan and interest are repaid only when you sell your home, permanently move away, or die.

 

Because you make no monthly payments, the amount you owe grows larger over time. By law, you can never owe more than your home's value at the time the loan is repaid. You continue to own the home, so you must pay the property taxes, insurance, and repairs. If you fail to pay these, the lender can use the loan to make payments or require you to pay the loan in full.

 

The amount of funding you get from a reverse mortgage usually depends on your age, your home's value and location, and the cost of the loan. The greatest amounts typically go to the oldest owners living in the most expensive homes getting loans with the lowest costs. Most people get the most money from the Home Equity Conversion Mortgage (HELM), a federally insured program.

 

Loans offered by some state and local governments are generally for specific purposes, such as paying for home repairs or property taxes. These are the lowest cost reverse mortgages. Loans offered by some banks and mortgage companies can be used for any purpose.

 

If you have questions about Reverse Mortgages, and whether they might be right for you, post your question or comment using the "comment" link below and we'll get back to you with answers to your questions, or find a loan professional who can answer your questions for you.