Home Mortgage

Question

Doris asks:

We own a home with my father in law. We have never made a late payment (past the 30 day mark) but our interest rate just jumped and it is becoming very difficult to make the payment prior to the 30 days late.

We have been weighing our options and are not sure what we should do. We owe $460 on our home and according to a few lenders/appraisers, our house is valued at $470 to $475. Our first and second loan are with different companies. We have listed the house but with the market the way it is, you can’t get a 100% loan so whoever were to buy our home would have to come in a substantial down payment. That possibly will not happen.

Do you think a DIL is a possibility? My father in law just added my husband to the title a few weeks ago but my father in law is the only one on the loan. If a DIL is an option, who’s credit will it affect?

Answer

larry answers:

You should first talk to the lender and make your situation clear to him. See what the options are that he provides to you. There are lot’s options like Forbearance or Mortgage Modification. If no options avail for you, only then you can request your lender for Short sale or Deed in lieu of foreclosure.

Deed in lieu of foreclosure is much better option than foreclosure because it will affect your Credit Score less than foreclosure. Deed in lieu of foreclosure will drop your credit score 80 to 100 points but foreclosure will drop your credit score 200 to 300 points.

I think both your husband’s and father in law’s credit will be affected but you father in law’s credit will be more affected as his name is on the loan.

Source: Mortgagefit.com

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Question

jayme78 asks:

My father and I bought a house together about 8 years ago. The deed was split 50/50, but I am the only person that ever made payments on the house. He was only on the loan. About a year ago I refinanced under only my name and then as a wedding gift, he did a quitclaim deed into my name. The house has appreciated quite a bit. Now the house is in my name as well as my husbands. Are we going ot have to pay a huge tax due the that half of the deed being gifted to me?

Answer

smithsussane answers:

As half of the property was deeded to you as a gift, there are chances that your father will have to pay a gift tax. However, you should note that there are certain exemptions as well while paying the gift tax. Gift transfers worth $12,000 per person in a year are not subject to gift tax. Thus, an individual can make gifts up to this amount to as many people as he/she wishes to in a year. Apart from this, there is a lifetime gifting limit of $1,000,000 before a gift tax is incurred.

Source:MortgageFit.com

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Question

barbara asks:

When is it necessary to include an assumption clause?

Answer

Jessica answers:

It becomes necessary to include an assumption clause in the loan document if you have planned to allow the buyer to assume the mortgage loan at the time of sale of your property.

This clause gives the buyer the responsibility of repaying the loan that was originally borrowed by the seller. But as the original borrower, you will still be liable for repaying the loan provided the buyer defaults and the lender decides to foreclose.

However, if the original borrower gets a release from the lender, then he will be relieved from the liability of repaying the loan.

Niicss answers:

If a creditor has already filed a judgment against your mother for any kind of payment defaults, then that creditor may consider this transfer as fraudulent and can penalize your mother. Otherwise, if she transfers the property to you and you record it, then no one will be able to place lien on the property. However, once the property is in your name, your creditors can place liens on it if you have defaulted on payments.

Source: MortgageFit.com

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Question:

j791 asks:

I am building a 210K home with 20% down and have a pre-approval letter from the bank. It will take 5 months to build the house and with rates this low, 4.8 for a 30yr fix, I think locking in a rate now might be the best bet. One lender only offers a 2 month lock for no additional charge and the other lender offers a 4 month lock for $630 and a 5 month lock for $820.

My question is can I go with the five month lock at 4.8 and then two months before I’m ready to close on the house go with a different lender who is offering lower rates? If so, what kind of fees would I owe the first lender for locking my rate and processing the loan?

Answer:

smithsussane answers:

I don’t think the lender will agree to give you a rate lock period for 5 months first and then again two months before you are ready to close on the property. In my opinion, 2 months rate lock with no additional charges is a good option. You should try going for it.

michael_ueltschey answers:

There is a product specifically for new construction that allows a 6 month lock with a float down option within 60 days if rates get better. It is called Builder rate cap. You can post here if you want more info.

Source: MortgageFit.com

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Question:

fishforfood asks:

We want to buy a house that is 130k. We have been looking at the FHA. I am somewhat confused about the PMI. From what I have gathered, you will pay 1.5% down then .5% anually for 5 years or until you have paid 22% of the price. Then if you sell the house before ten years you will have to pay a recapture fee. I do not believe we will be in this house for ten years. Also, i have read where we will be paying more for insurance than we would with a conventional loan.

With the conventional loan, we have to have atleast 5% down. Which we will be able to get. Then we will have to pay PMI until 20% of the purchase price is reached. I am sure we will be able to qualify for a Conv loan.

Answer:

Niicss answers:

FHA loans are federal assistance mortgage loan programs which are insured by the Federal Housing Administration. These loans are mainly issued by federally qualified lenders. On the other hand, conventional loans are basically any kind of real estate loan which are not backed by the Veterans Administration or protected by the FHA. FHA loans have lower down payments and credit-qualifying guidelines.

gmakerley answers:

that 22% figure hit me in the eyes. that’s not accurate.

one of the keys in high ltv financing these days is your credit score. with conventional loans, unless you have a score of 740 or above, you’ll be charged a fraction of a point, or more, in order to obtain 95% financing. not only that, but fewer mortgage companies are insurance such loans, and those that do charge much higher rates than previously.

with fha loans, there is an upfront mortgage insurance premium based on 1.75% of the loan amount; then there is a .55% monthly MIP incorporated into your loan payment. when you sell a home, or refinance, you would be eligible for a refund of that upfront premium. i can’t tell you the calculation as to the refund, but i know it exists. if the .55 exists for 5 years, that totals a little less than 3% of the overall loan amount. so…adding the 3% to the 1.75%, that comes to less than 5%. who told you 22%?

once you have your credit scores in hand, check into both possibilities and see how they shake out. you’ll then be able to compare and choose the better product for you.

Source: MortgageFit.com

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Question:

Carmen asks:

I received notice of default in October 2008, I am in a loan review with my mortgage company right now. It has been almost 3 months since they began reviewing my loan, and although I call on a weekly basis, they tell me it is still in review for a payment plan. I have also been told, by a lawyer, that if I cannot accept the repayment plan, to look into a Quick Deed option. My question is, what steps do I need to take now, and how long does it take to do a loan review? The longer it takes the more I will have to pay, I was already 3 payments behind and now it has been another 3 months, so that is six months of payments. Every time I call Countrywide they tell me I am still in review and should receive documents on a payment agreement via Fed Ex. They don’t give me a time frame. I am confused and they are NOT helping.

Answer:

gmakerley asks:

you need to stay on top of them. keep in mind that mortgage companies/banks, etc. were not at all prepared for this onslaught of mortgage problems. their staffing is woefully inadequate as a result. there are thousands of others in the same boat as you, and getting back quickly to each has obviously been a hardship for the lenders.

if you don’t already have an advocate (lawyer, counselor) on your side in dealing with them, then you ought to find one so you can exert a bit more pressure.

we don’t often think so, but most of the lenders are doing their best to try to work with each client. timing might be off, and might be terrible, so it’s best to be persistent in order to obtain results.

Are you in Minneapolis looking for a Minneapolis home mortgage?

Question:

benchman10 asks:

I have 2 investment properties, that are now in negative equity and still going down. I have been supporting them for over 2 years now, but getting very close to not being able to pay for them any longer. Have lost a lot of money on these investments.

One of the properties qualifies for a deed in lieu as its been on the market for longer then 3 months, the other, unfortunately has not. I have not been actively trying to sell it as nothing is selling so I did not bother to put in up for sale.

I’m now facing a dilemma, should I deed in lieu the properties, or foreclose or go to bankruptcy court. I still do not entirely understand how my credit is effected in each scenario.

Answers:

Caron answers:

The credit effects of foreclosure, deed-in-lieu and bankruptcy are all damaging no doubt. But yes, there’s a difference in how a deed-in-lieu and foreclosure can affect a borrower.

In general, a deed-in-lieu has less negative impact as compared to foreclosure.

As far as bankruptcy is concerned, it is indeed damaging if it’s chapter 7, a slightly less if it’s chapter 13. This is due to the fact that in the former case, you need not pay anything and get rid of your debts through the sale of your assets. But in chapter 13, you can start paying off apart of your debt and this implies that you are trying to get current on your loans, which is positive and hence your credit score is affected comparatively less than that of in chapter7. However, in general, a bankruptcy lowers your score by 150-200 points.

Evolvik26 answers:

I would say the bankruptcy is the least impact you can have. Once the BK has been started your creditors can no longer report your debt delinquent so you get the hit from bk and thats it (most ppl can rebuild in 2 years) in all other situation your bank wouldnt even concider negotiating till you are 2-3 months behind and then your credit is shot. Add a foreclosure or deed in lieu and you are looking at a 7 yr record and your credit way below radar.

Source:MortgageFit.com

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Question:

Dougie Curtist asks

I live in California, my house is paid off free and clear, but my taxes for the property are to high to pay at once, how can I make small payments, maybe an impound account without a loan?

When a house is up for sale and the property tax is listed is it usually the entire year that is listed or split up into monthly payments?

Answer:

Jameshogg answers:

As far as I know, paying the taxes in full and on time is better as it helps a person to avoid penalties. However, if your property taxes are too high and if you have ended up in back taxes, then, as far as I know, you can request for a payment agreement. You can contact a tax professional who can guide you in doing the payment agreement with IRS.

Adonis answers:

Property taxes are paid in full at the end of each year. As far as I know, the property taxes will be listed for the whole year and not split into monthly payments.

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Question:

What is a wet settlement act?

Answer:

At the time of settlement sellers want their money as early as possible after signing the deed. Most expect to receive a check at the settlement table.

This law was enacted for preventing delays by lenders in sending the funds to the settlement attorney. Previously what use to happen is that settlement attorney used to hold the closing & then send closing documents to lender for approval. After the documents were reviewed & approved, lender normally used to send a check to settlement attorney. This process used to take 1 or 2 days but in some instances it can also happen that it takes almost 2 weeks.

Wet Settlement Law forces lenders to provide the funds at or before closing in the form of wired funds, cash or certified check at the time of settlement. In return lenders require that the settlement attorney does not disburse the funds until mortgage lien is recorded in the land records.
Source:MortgageFit.com

Question:

mambwe asks:

I have agreed on a price for a house and I am in the process of looking for a mortgage. Combined we make ~$150,000 and have a 20% down payment. We also have enough money for closing costs. My credit scores range between 725 to 817. My fiance is 696(This is under dispute) to 781. We have a combined ~$90,000 in student loans and 1 car lease. Otherwise we have absolutely no other debt. My fiance has one small collection of $120 from a car accident from 2004 that still has not been cleared. On the credit report it says $120 but when we call to clear it they say it is $1500.

The purchase price of the house is $355,000, so the loan is for $284,000. Taxes are $10,021. The house will appraise for in the lows $400’s.

What rates should we qualify for? Would we get the best rates available?

Answer:

gmakerley answers:

you can get the best interest rates available, but that doesn’t necessarily mean you won’t pay points to get there. lenders are going to use your mid-scores, not your lowest. you didn’t state those, but of course, what you see when you pull them up isn’t what your lender will see. there is a difference in scoring for consumers vis a vis creditors.

you’ll likely pay a penalty for your fiance’s score, unless his mid-score (and yours, also) is 740 or more. that penalty won’t be terribly severe, though even .25 (a quarter point) is $710. his collection account may very well have to be paid in full in order for you to move on.

trism17 answers:

You’ll definitely want both middle scores to be 740 or higher right now. That can get you the best rate, but like he said the difference is going to be the profit margin each lender desires to make and how much of a fee you’d pay to get that best rate.

When we see “best rate”, we realize that as the rate where the lender does not pay us for anything. If a client is unwilling to pay any fee, they are then asking us to work weeks for free. That is where the flexibility and negotiation comes in.

The end result should be a combination of a rate and fee that you are comfortable with. Also know that without a formal loan application being completed, there are many other things that may come into play and alter the rate that lenders will offer. Without knowing all of the proper information, your “best rate” for a good credit score means nothing until all other information is revealed.

Source: MortgageFit.com