Reverse Mortgages #mortgage #rates #pittsburgh


#reverse mortgage info

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Reverse Mortgages

Reverse mortgage, also known as Home Equity Conversion Mortgage (HECM) are special loans specifically made for older homeowners. A reverse mortgage allows borrower to convert a portion of the equity on your home now into cash.

Over the years there is equity that is built up on your home from making mortgage payments. This loans converts that equity and can be paid to you. However, these loans do not require monthly mortgage payments. Instead the interest is added to the loan balance each month. You only have to pay the loan until the borrower is no longer using the home as their principal residence or they fail to meet the obligations of the mortgage. These loans can also be used to purchase a primary residence

What are the qualifications?

To qualify for a reverse mortgage you must be a homeowner of 62 years or older. You must own your home outright, or have a low mortgage balance that can be paid off at closing with the savings from the revers loan. You must have a financial resource to pay ongoing property charges like taxes and insurance. You must live in the home as your primary residence and you must work with a reverse mortgage counselor prior to obtaining the loan.

Is my home eligible?

All homes that are single family homes or a 2-4 unit home with at least one unit occupied by the borrow your are eligible. There is a list of HUD- approved condos that meet the FHA requirements that are also eligible for a reverse loan.

For this program there are a number of ways you can receive the payments:

  • Tenure these are equal monthly payments as long as at least one borrower lives in the property as a primary residence.
  • Term- monthly payments for a fixed period of time.
  • Line of credit- Unscheduled payments at the time of the borrower s choosing until the credit line is exhausted.

These loans are commonly used for home renovations, medical expenses, and daily expenses. The reverse mortgage can be used to pay off existing mortgages, and alleviate of some finical stress. If you or a family member might qualify for a Revers mortgage check out your options and start getting rid of your mortgage today.

IMPORTANT MORTGAGE DISCLOSURES:

When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

Any mortgage product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the mortgage credit product.

When applying for a mortgage credit product, lenders will commonly require you to provide a valid social security number and submit to a credit check. Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved for mortgage refinancing.

Minimum credit ratings may vary according to lender and mortgage product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee.

Copyright 2016

Mortgage Rate Lock is not a government agency. Not affiliated with HUD, FHA, VA, FNMA or GNMA. We work hard to match you with local lenders for the mortgage you inquire about. This is not an offer to lend and we are not affiliated with your current mortgage servicer.

NMLS ID #1237615 | AZMB #0928735

8149 N. 87th Place, Suite 211, Scottsdale, AZ 85258


Can I get a mortgage with my credit rating? #calculate #house #payment


#mortgage bad credit

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Credit ratings

It might not seem fair but even having a big deposit in place and a decent salary isn’t enough to guarantee you a mortgage. If you have a bad credit score then your application is likely to be refused.

The state of play

Banks and building societies are cautious about who they lend to, so they always check credit reports carefully to see if potential mortgage customers have defaulted on any debt payments in the past. They will also look for any County Court Judgments (CCJs) against you, or if you have ever filed for bankruptcy.

In any of these scenarios apply, the chances are you won’t be eligible for most mortgage deals – even if your financial problems occurred a long time ago.

Which mortgages am I eligible for?

There are some mortgages however, which are specifically designed for those whose credit history is far from perfect. These are often known as ‘sub-prime’ mortgages or ‘adverse credit’ mortgages, and are generally offered by lenders specialising in this market.

While they work in the same way as standard mortgages, insofar as you borrow a certain amount and then make monthly repayments over a set term, interest rates are unsurprisingly higher and you are likely to need a more sizeable deposit to put down.

Most lenders will require a deposit of at least 25% to 30% of the property value, compared to around 5% to 10% if you were applying for a standard mortgage.

Check your credit history

Before applying for any mortgage, you should always check your credit report carefully, to establish if there is any reason why your application could be refused. You can obtain a copy of your report from one of the major credit rating agencies, which include Experian, Equifax and CallCredit.

Remember that certain simple oversights, such as not being registered on the electoral roll, or failing to close down credit card accounts that you no longer use, can have a negative impact on your credit rating.

What else mortgage lenders need to know

As well as looking at your credit report, lenders will usually ask you to supply several other bits of information before they agree to offer you a mortgage.

They will want to see pay slips from your employer or typically three years’ accounts if you are self-employed and bank statements to see how you manage your account.

The lender will also ask what other debts you have, so you will need to disclose if you have any personal loans or credit cards. If possible, it’s a good idea to try to pay these down before applying for a mortgage, as this will demonstrate that you take a responsible approach to your finances.

Always try and pay any bills on time too, as late payments will again have a negative impact on your credit history.

Compare interest rates

When applying for any mortgage, whether you have a poor credit history or not, it is vital to compare as many deals as possible to ensure you find the right one to suit your needs. If you aren’t certain which mortgage to go for, then you should speak to a mortgage broker who can talk you through the available options.

Remember to factor in arrangement fees and any other charges, as these can have a significant impact on the overall cost of the mortgage too.

Ready to find a mortgage?

Contact moneysupermarket.com at Moneysupermarket House, St David’s Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2013

Moneysupermarket.com Limited is an appointed representative of Moneysupermarket.com Financial Group Limited, which is authorised and regulated by the Financial Conduct Authority (FCA FRN 303190).
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Mortgages Frequently Asked Questions – Santander UK #home #payment #calculator


#standard mortgage

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Mortgages frequently asked questions

Order a redemption statement by calling or writing to us using the details below:

Santander Mortgages:
Santander Mortgage and Loan Operations, Bridle Road, Bootle, L30 4GB
Tel: 0800 917 5630. 8am to 7pm Monday to Friday and 9am to 1pm Saturday.

Alliance Leicester Mortgages
Santander, Image Document Centre, Carlton Park, Narborough, LE19 0AL
Tel: 0800 917 5630. 8am to 7pm Monday to Friday and 9am to 1pm Saturday.

Our tariff of mortgage charges shows our current charges. We send a copy of our current tariff of mortgage charges each year with the annual mortgage statement.

What is your account fee?
The account fee is the fee for managing your mortgage account and also includes closing your mortgage account when your mortgage ends. It only has to be paid once during the life of your mortgage on your property. You can pay it on completion, or it can be deferred until the end of your mortgage. Please note the fee won’t increase throughout the life of your mortgage on your property.

We do not currently offer new Buy to Let mortgages through the branch or over the phone however we do offer these through Independent Financial Advisers. If you have an existing Buy to Let mortgage and you have a query, please call us on 0800 917 5630. Lines are open 8am to 7pm Monday to Friday and 9am to 1pm Saturday.

The Mortgage Credit Directive (MCD) is new European legislation which must be implemented in the UK and across Europe by 21 March 2016 we ll be implementing the changes ahead of this date. Although the UK has a robust set of regulations, following the Mortgage Market Review in 2014, MCD is there to provide standardisation across the European Union.

It will affect you if you re buying your first home, moving home, remortgaging to us from another lender or taking out an additional loan with your existing lender.

There are four key changes:

1. European Standardised Information Sheet
There is a new form of illustration which is called the European Standardised Information Sheet (ESIS). It will eventually replace the Key Facts Illustration (KFI) which is currently used for all mortgages and which is like a quotation for a specific mortgage deal.
Whilst the format is different and information may be in different sections, the key points are still displayed in both the ESIS and KFI.
From 21 March, lenders have the option of using the ESIS or keeping the KFI but with the additional MCD information – we re continuing to use the KFI. All lenders must use the ESIS from March 2019.

2. Annual Percentage Rate (APR)
The APR allows you to compare the overall cost of mortgage deals from all lenders. For those lenders using the ESIS this will be called the Annual Percentage Rate of Charge (APRC). The APR and APRC costs can still be compared across lenders when comparing a KFI and the ESIS.

MCD also requires us to provide a second APR. This needs to be provided for mortgages which have a variable interest rate at some point during the mortgage term e.g. fixed rate mortgage changing to our Standard Variable Rate or a tracker rate mortgage. This second APR shows the cost of a mortgage should interest rates rise to a 20 year historic high it is purely for illustrative purposes.

3.Reflection period and binding offer
We need to provide you with a reflection period lasting at least seven days. This is to give you a chance to review your mortgage offer, make comparisons and assess the implications of accepting it and taking out a mortgage. This reflection period will begin when we issue your mortgage offer.

From 21 March, the mortgage offer you receive from a lender will be binding on the lender, meaning it cannot be withdrawn without there being a justifiable reason, for example:

  • a material change relating to your offer such as mortgage amount
  • where false and/or inaccurate information has been provided
  • if the Conveyancer is unable to confirm requirements such as a satisfactory certificate of title

4. Foreign currency mortgages
Although we only offer mortgages in pounds sterling, we do consider employed income and/or interest only repayment vehicles in a foreign currency. Where this is the case, the mortgage is classified as a foreign currency mortgage. With a foreign currency mortgage you need to be aware of the implications of exchange rate fluctuations. If the value of the foreign currency moves against you, it could become more difficult to afford your monthly mortgage payments and/or repay your interest only mortgage.

Within the KFI we show the impact of a 20% adverse movement in the foreign exchange rate. Once your mortgage has completed, we’ll monitor the exchange rate and if it moves against you by 20%, we’ll write to let you know.

If you have any questions please contact us.

You only pay back the interest with each monthly payment so at the end of your mortgage term you still owe the amount you borrowed when you took out the mortgage.

Most lenders insist you put a repayment plan in place for the original amount you borrowed an investment designed to raise the money you need to pay off the initial capital at the end of your mortgage.

With this option you’re guaranteed to pay off your entire mortgage by the end of the term, provided you don’t miss any payments.
The amount that you pay each month is made up of capital and interest and is calculated to repay all of your mortgage by the end of the term.

There are a number of options open to you. Your options could include:

1. Change your mortgage from an interest only to a repayment mortgage with, or without, changing your mortgage term.

2. Make overpayments on your interest only mortgage to reduce the capital outstanding, with the aim of paying it back by the end of the mortgage term. You can overpay up to 20% each calendar year (January to December) on any interest only fixed rate loan amount without paying an early repayment charge. This offer will be withdrawn on 31 December 2016 and will change to 10% of your loan amount. If you ve got an Alliance Leicester mortgage, you can overpay up to 20% on any interest only fixed rate loan amount in January of each year without paying an early repayment charge. This offer will be withdrawn on 31 January 2017 and will change to 10% of your loan amount.

The majority of our tracker rates and Standard Variable Rate mortgages allow you to make unlimited overpayments without paying an early repayment charge. Check your original Key Facts Illustration for more details.

3. Consider selling your property or any other assets you hold, to pay back your interest only mortgage and consider downsizing to a lower value property.

Talk to us
We can help you understand the options available to you. Call us on 0800 085 0980. Lines are open 9am to 5pm Monday to Friday.

Talk to an Independent Financial Adviser (IFA)
They may charge a fee but can help you work out the best plan for you. Find an Independent Financial Adviser in your area

When you talk to either us or an independent financial adviser, it can help to have a good idea of:

current and future expenses

the value of your home

how much you owe on your mortgage

You may also be interested in


Bad credit mortgages – How to get the best mortgage deal – Mortgages – property


#mortgage bad credit

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How to get the best mortgage deal Bad credit mortgages

Some lenders specialise in providing mortgages to people with a bad credit rating

Getting a mortgage when you’ve got a bad credit rating is tough, but not impossible. We explain what options are available and what you can do to improve your prospects.

How have bad credit mortgages changed?

Since the credit crunch, it has become more difficult for people with a bad credit score to get a mortgage.

Before 2007, the sub-prime sector – ie the part of the mortgage market aimed at people with bad credit – was viewed as a great money-maker for lenders, and these kind of loans were widely available.

However, in recent years lenders have become more risk averse, and the market for bad credit mortgages has become more limited.

Nevertheless, there are still some lenders in the UK that specialise in offering mortgages to borrowers with a poor credit history.

  • If you’re struggling with mortgages because of a poor credit rating, we’d recommend talking to a whole-of-market, impartial broker such as Which? Mortgage Advisers. The friendly team can assess your situation and explain which mortgages you’re most likely to get accepted for. Call for a free consultation on 0808 252 7987.

Can I get a mortgage with bad credit?

If you have a bad credit history, you may still be able to find a mortgage using specialist lenders, but getting accepted will be harder for you than it is for people with better credit records.

You’ll have to pay higher-than-average interest and will need to have a large deposit. This is because bad credit mortgage lenders often restrict the amount they are willing to lend.

A mortgage for someone with poor credit will usually be capped at around 80% of the value of the property, though some lenders will only offer mortgages up to 60% of the value of the property.

Why do I have a bad credit rating?

A number of things can affect your credit rating. Some of the main reasons include:

  • if you have missed credit card, loan or mortgage payments
  • if you are in some kind of debt repayment arrangement, eg an IVA, or have been declared bankrupt
  • if you have County Court Judgments against you
  • if you have never taken out any credit and so haven’t built up a record of paying things back in time.

Whether or not you think these factors apply to you, you should always check out your credit report before applying for a mortgage. The three biggest organisations for this are Callcredit, Equifax and Experian. If you’re concerned, it’s worth checking how you fare with all three companies, as they all score slightly differently.

Once you have your report(s), consider what you can do to improve your credit rating, and check that all the information on record about you is correct. Avoid making lots of different applications for credit, including mortgages, as this will show up on your record and may harm your rating further.

In some cases, it will be better to wait until your credit history has improved so you can access more affordable mortgage deals. A good mortgage adviser will be able to ascertain what mortgage deals you are likely to be accepted for and advise whether you’re better off waiting.

Remortgaging with a bad credit mortgage

Making your monthly mortgage repayments on time will help you build a stronger credit history (assuming all other debt is also paid back on time).

It may therefore eventually be possible to remortgage to secure a better rate from a traditional lender.

Which? Mortgage Advisers has a detailed remortgaging guide with all the information you need to help you understand your mortgage options and get the best deal.

More on this.


Are Subprime Mortgages Coming Back? #calculate #my #mortgage


#subprime mortgages

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The New York Times

Are Subprime Mortgages Coming Back?

September 9, 2014

It’s the Economy

By BINYAMIN APPELBAUM

Ali and Mariluci Sleiman wanted to buy a house. The couple, who run a day care service inside their first-floor rental apartment, had outgrown their space in Taunton, a small city in southern Massachusetts. They also wanted to avoid answering to a landlord who might complain about 10 little kids running around all day. They were “desperate to buy a home,” Ali told me. And with good credit and $46,000 in joint income, they hoped they wouldn’t have a hard time getting a loan. So they were disappointed when the bank rejected their application, and then when a local credit union did too.

Six years ago, a deluge of mortgage lending sparked a credit crisis that led to the worst financial meltdown since the Depression. Now, after years of chastened retreat, we are in the midst of a lending drought. Banks have ratcheted mortgage-qualification standards to the tightest levels since at least the 1990s. The federal government — seeking to formalize this new caution — has imposed a host of rules, starting with requiring banks to document that borrowers can repay the loans. “We’ve locked down mortgage lending to the point where it’s like we’re trying to avoid all defaults,” said William D. Dallas, the chairman of Skyline Home Loans, who has three decades of experience in the industry. “We’re back to using rules that were written for Ozzie and Harriet. And we’ve got to find a way to help normal people start buying homes again.”

This lending freeze is not just preventing people like the Sleimans, who have struggled to document their income, from chasing their dreams. It’s bad for the overall economy too. Laurie S. Goodman, an expert in housing finance at the Urban Institute, a think tank in Washington, D.C. recently calculated that lenders would have made an additional 1.2 million loans in 2012 had they merely loosened standards to the prevailing level in 2001, well before the industry completely lost its sense of caution. As a result, fewer young people are now buying first homes, fewer older people are moving up and less money is changing hands. Instead of driving the economic recovery, the housing business is dragging behind. “An overly tight credit box means fewer individuals will become homeowners at exactly the point in the housing cycle when it is advantageous to do so,” Goodman and her co-authors wrote in their study, published in The Journal of Structured Finance. “Ultimately, it hinders the economy through fewer new-home sales and less spending on furnishings, landscaping, renovations and other consumer spending.”

It seems, in other words, as if it might be time for the revival of the subprime-lending industry. Long before these risky loans were blamed, in part, for helping usher in the financial crisis, subprime lending was embraced as a promising antidote to the excessive caution of mainstream lenders. After all, key mortgage rules were first written in the middle of the last century, and they still reflect old-fashioned economic assumptions. It’s still easiest to qualify for a mortgage if a household has one primary breadwinner who is paid a regular salary, has a history of repaying other loans and has enough money saved or inherited to make a significant down payment. Indeed, mainstream lenders have a long history of using race as a proxy for risk, like the refusal to lend in entire “redlined” neighborhoods. Last week, the attorney general’s office in New York filed suit against a Buffalo lender, Evans Bank, saying it redlined an area of east Buffalo that is home to more than 75 percent of the city’s African-Americans. (Evans Bank has denied this charge.) Similar lawsuits have recently been filed in Los Angeles and Providence, R.I. Goodman and her colleagues found that those excluded from credit in 2012 were disproportionately African-American and Hispanic households.

The subprime solution has always been relatively simple. Instead of offering fixed terms to anyone who meets “prime” standards, terms are tailored to borrowers. People who are judged less likely to repay loans are charged a proportionately higher interest rate. Before things got out of hand during the last decade, subprime lending offered opportunity for many people, including minorities and immigrants, whose economic lives, like the Sleimans’, did not conform to the mortgage industry’s traditional expectations.

Most subprime borrowers continue to repay their debts and live in their houses. But even in the industry’s heyday, subprime lending had critics who argued that it deepens underlying economic inequalities between those with money and those who must borrow it. They would prefer to focus on improving economic opportunities or loosening restrictions on housing construction in desirable areas, like coastal cities, where prices are highest. And their arguments have certainly been buttressed by an industry that has a habit of behaving badly — overcharging customers who cannot easily tell the difference between a reasonable-risk premium and an inflated interest rate and persuading investors to pump money into those loans.

The new subprime lenders, however, seem to be trying to rebuild their business in a more cautious manner. Dallas, who created a lending company during each of the last two booms — each time selling before the crash — said that his new venture, Skyline Home Loans, spends about $3,500 on compliance per loan and only approves about two a day. Before the crisis, he told me, he didn’t spend a penny, and a typical underwriter approved 10 loans. Gone, he insists, are the days “where nobody looks at your income or your credit.” He suggested that he was helping some of those 1.2 million deserving Americans become homeowners.

Some experts also agree that access to lending should be broadened. But in order to protect borrowers, stronger institutional measures must be taken. One approach would change the rules of bankruptcy, which currently allow judges to reduce the burden of most kinds of debt but, notably, not primary home mortgages. Jennifer Taub, a professor at Vermont Law School, argues that changing this law would keep lenders on good behavior because they wouldn’t want to end up at the mercy of a bankruptcy judge. “If everyone knows that these are the rules of the game,” Taub told me, “there will be a lot more attention to make sure that the underwriting is proper.” Amir Sufi, an economist at the University of Chicago, and Atif Mian, an economist at Princeton, have proposed a slightly more ambitious plan. During broad economic downturns, they suggest, mortgage payments should automatically drop as area home prices fall. In exchange, lenders would get a share of eventual profits if the price of a home eventually rose again.

In truth, the benefits of homeownership are often overstated. Home values have climbed only a little faster than inflation over the last 125 years, according to data compiled by the Yale University economist Robert Shiller. The kind of house that sold in 1890 for the inflation-adjusted equivalent of $100,000 would sell today for about $134,000. Still, Americans just want to buy them. A recent poll found that 76 percent of Americans considered homeownership “necessary” to be a member of the middle class. When I asked the Sleimans why they wanted to move, their answer was as emotional as it was practical. “This is a good property, but it’s not ours — it’s a rented home,” Ali Sleiman told me. “It does not fit our needs. Or our dreams.” And as long as that is the case, it makes sense for public policy to focus on safety rather than abstinence.

Correction: September 21, 2014

The It s the Economy column on Sept. 14, about subprime mortgages, misstated part of the name of the law school where Jennifer Taub is a professor. It is Vermont Law School, not the University of Vermont Law School.


Subprime Mortgage Crisis – A detailed essay on an important event in the history of


#subprime mortgages

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2007-2010
by John V. Duca, Federal Reserve Bank of Dallas

How and Why the Crisis Occurred
The subprime mortgage crisis of 2007–10 stemmed from an earlier expansion of mortgage credit, including to borrowers who previously would have had difficulty getting mortgages, which both contributed to and was facilitated by rapidly rising home prices. Historically, potential homebuyers found it difficult to obtain mortgages if they had below average credit histories, provided small down payments or sought high-payment loans. Unless protected by government insurance, lenders often denied such mortgage requests. While some high-risk families could obtain small-sized mortgages backed by the Federal Housing Administration (FHA), others, facing limited credit options, rented. In that era, homeownership fluctuated around 65 percent, mortgage foreclosure rates were low, and home construction and house prices mainly reflected swings in mortgage interest rates and income.

In the early and mid-2000s, high-risk mortgages became available from lenders who funded mortgages by repackaging them into pools that were sold to investors. New financial products were used to apportion these risks, with private-label mortgage-backed securities (PMBS) providing most of the funding of subprime mortgages. The less vulnerable of these securities were viewed as having low risk either because they were insured with new financial instruments or because other securities would first absorb any losses on the underlying mortgages (DiMartino and Duca 2007). This enabled more first-time homebuyers to obtain mortgages (Duca, Muellbauer, and Murphy 2011), and homeownership rose.

The resulting demand bid up house prices, more so in areas where housing was in tight supply. This induced expectations of still more house price gains, further increasing housing demand and prices (Case, Shiller, and Thompson 2012). Investors purchasing PMBS profited at first because rising house prices protected them from losses. When high-risk mortgage borrowers could not make loan payments, they either sold their homes at a gain and paid off their mortgages, or borrowed more against higher market prices. Because such periods of rising home prices and expanded mortgage availability were relatively unprecedented, and new mortgage products’ longer-run sustainability was untested, the riskiness of PMBS may not have been well-understood. On a practical level, risk was “off the radar screen” because many gauges of mortgage loan quality available at the time were based on prime, rather than new, mortgage products.

When house prices peaked, mortgage refinancing and selling homes became less viable means of settling mortgage debt and mortgage loss rates began rising for lenders and investors. In April 2007, New Century Financial Corp. a leading subprime mortgage lender, filed for bankruptcy. Shortly thereafter, large numbers of PMBS and PMBS-backed securities were downgraded to high risk, and several subprime lenders closed. Because the bond funding of subprime mortgages collapsed, lenders stopped making subprime and other nonprime risky mortgages. This lowered the demand for housing, leading to sliding house prices that fueled expectations of still more declines, further reducing the demand for homes. Prices fell so much that it became hard for troubled borrowers to sell their homes to fully pay off their mortgages, even if they had provided a sizable down payment.

As a result, two government-sponsored enterprises, Fannie Mae and Freddie Mac, suffered large losses and were seized by the federal government in the summer of 2008. Earlier, in order to meet federally mandated goals to increase homeownership, Fannie Mae and Freddie Mac had issued debt to fund purchases of subprime mortgage-backed securities, which later fell in value. In addition, the two government enterprises suffered losses on failing prime mortgages, which they had earlier bought, insured, and then bundled into prime mortgage-backed securities that were sold to investors.

In response to these developments, lenders subsequently made qualifying even more difficult for high-risk and even relatively low-risk mortgage applicants, depressing housing demand further. As foreclosures increased, repossessions multiplied, boosting the number of homes being sold into a weakened housing market. This was compounded by attempts by delinquent borrowers to try to sell their homes to avoid foreclosure, sometimes in “short sales,” in which lenders accept limited losses if homes were sold for less than the mortgage owed.

In these ways, the collapse of subprime lending fueled a downward spiral in house prices that unwound much of the increases seen in the subprime boom.

The housing crisis provided a major impetus for the recession of 2007-09 by hurting the overall economy in four major ways. It lowered construction, reduced wealth and thereby consumer spending, decreased the ability of financial firms to lend, and reduced the ability of firms to raise funds from securities markets (Duca and Muellbauer 2013).

Steps to Alleviate the Crisis
The government took several steps intended to lessen the damage. One set of actions was aimed at encouraging lenders to rework payments and other terms on troubled mortgages or to refinance “underwater” mortgages (loans exceeding the market value of homes) rather than aggressively seek foreclosure. This reduced repossessions whose subsequent sale could further depress house prices. Congress also passed temporary tax credits for homebuyers that increased housing demand and eased the fall of house prices in 2009 and 2010. To buttress the funding of mortgages, the Congress greatly increased the maximum size of mortgages that FHA would insure. Because FHA loans allow for low down payments, the agency’s share of newly issued mortgages jumped from under 10 percent to over 40 percent.

The Federal Reserve, which lowered short-term interest rates to nearly 0 percent by early 2009, took additional steps to lower longer-term interest rates and stimulate economic activity (Bernanke 2012). This included buying large quantities of long-term Treasury bonds and mortgage-backed securities that funded prime mortgages. To further lower interest rates and to encourage confidence needed for economic recovery, the Federal Reserve committed itself to purchasing long-term securities until the job market substantially improved and to keeping short-term interest rates low until unemployment levels declined, so long as inflation remained low (Bernanke 2013; Yellen 2013). These moves and other housing policy actions—along with a reduced backlog of unsold homes following several years of little new construction—helped stabilize housing markets by 2012 (Duca 2014). Around that time, national house prices and home construction began rising, home construction rose off its lows, and foreclosure rates resumed falling from recession highs. By mid-2013, the percent of homes entering foreclosure had declined to pre-recession levels and the long-awaited recovery in housing activity was solidly underway.

Bibliography
Bernanke, Ben S. “ A Century of U.S. Central Banking: Goals, Frameworks, Accountability ,” Speech given at The First 100 Years of the Federal Reserve: The Policy Record, Lessons Learned, and Prospects for the Future, a conference sponsored by the National Bureau of Economic Research, Cambridge, MA, July 10, 2013.

Bernanke, Ben S. “ Challenges in Housing and Mortgage Markets ,” Speech given at the Operation HOPE Global Financial Dignity Summit, Atlanta, GA, November 15, 2012.

Case, Karl E. Robert J. Shiller, and Anne K. Thompson, “What Have They Been Thinking? Homebuyer Behavior in Hot and Cold Markets,” Brookings Papers on Economic Activity. Fall 2012, 265-98.

DiMartino, Danielle, and John V. Duca. “ The Rise and Fall of Subprime Mortgages ,” Federal Reserve Bank of Dallas Economic Letter 2, no. 11 (November 2007): 1-8.

Duca, John V. “The Long-Awaited Housing Recovery,” Federal Reserve Bank of Dallas Annual Report. 2013.

Duca, John V. John Muellbauer, and Anthony Murphy. “House Prices and Credit Constraints: Making Sense of the U.S. Experience.” Economic Journal 121, no. 552 (May 2011): 533-51.

Duca, John V. and John Muellbauer, “Tobin LIVES: Integrating Evolving Credit Market Architecture into Flow of Funds Based Macro-Models,” Working Paper Series 1581, European Central Bank, Frankfurt, Germany, 2013.

Written as of November 22, 2013. See disclaimer .


Mortgage Prequalification Calculator: Do you Prequalify For Mortgage? #mortgage #lender


#prequalify mortgage

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Prequalification Calculator

User Rating. ( 409 votes, average: 2.66 out of 5 )

Want to prequalify for a mortgage? Our mortgage pre-qualification calculator shows how lenders see you. See how much you can afford based on yearly income, debts other factors. Our mortgage pre-qualification calculator will indicate how much you can borrow with a home loan by analyzing your income, assets, and current mortgage interest rates available to you.

How to use the Prequalification calculator

Enter Your Financial Information

  • Gross Monthly Pay: Your household income before taxes and deductions.
  • Loan Term: The number of years you’ll have to repay your mortgage.
  • Annual Percentage Rate (APR): Enter the estimated mortgage interest rate (see a list of current mortgage interest rates ).
  • Local Property Tax Rate: You can obtain this information from the local property tax collector’s office or website. Enter the percentage rate (not the dollar amount) in the calculator.
  • Money Available for Down Payment and Closing Costs: The amount of cash you have to pay toward these expenses.
  • Other Monthly Obligations: Include recurring installment payments, including credit cards, auto payments, personal and education loans.

Click the “calculate” button, and check the results.

Home Purchase or Refinance: Can You Prequalify?

  • Home Value / Purchase Price: The maximum amount you prequalify for, based on the information provided.
  • Total Cash Paid at Closing: The amount you’re contributing for closing costs and a down payment.
  • Cash Applied to Closing Costs: An estimate of closing costs.
  • Cash Applied to Down Payment: What’s left of your cash contribution is used for a down payment.

Monthly Housing Expenses

  • Mortgage Payment: The amount of the principal and interest payment based on the amount you qualify to borrow and the interest rate you’ve entered.
  • Property Taxes: The estimated monthly amount of property taxes. If you’re putting less than 20% down, this amount will be added to your mortgage payment.
  • Mortgage Insurance: A down payment of less than 20% of the purchase price will require mortgage insurance, which will be added to your mortgage payment.
  • Hazard Insurance: As with taxes and mortgage insurance, this will be added to your mortgage payment if you borrow more than 80% of your home’s purchase price.
  • Total Housing Expense: This amount generally shouldn’t exceed 28% of your gross income if you want to prequalify.
  • Other Monthly Expenses: The amount you entered for other monthly payment obligations.
  • Total Monthly Expenses: The sum of your total monthly housing payment and other monthly expenses. It generally exceed 36% of your gross monthly income for pre-qualification purposes.

These figures are guidelines. Those with spotless credit, lots of assets, or a very stable job history might qualify for more financing. Conversely, those with credit problems or minimal assets may qualify for less. We recommend that you speak directly with lenders to determine what is right for your situation. You can request up to four free quotes from competing lenders here, with no cost and absolutely no obligation to you.

You can also compare savings on loan terms, rates and amounts using the amortization calculator. and determine potential benefits of refinancing using the refinance calculator

38 Responses to “Prequalification Calculator”

  1. Taylor 22, Sep, 2012

Nice. It says up to $70,000 for a mortgage loan. I’m a first time home buyer and that’s exactly what I’m looking for. $529 for total monthly expense with mortage insurance and hazard insurance for my low 4% down payment. But did not expect $2000 in closing costs. Thanks

Thanks for this tool

I have no mortgage on my property. I’m interested in getting a cash-out refinance or a home equity loan, and I’d like to know how much money will I be able to borrow, will the calculator work for that purpose, or do they have a different standard? Thanks

Excellent tool and excellent responses to the other “tools” below! Thanks so much for making this available and for your thorough responses to questions!

Okay, um the calculator says i can afford a $3,695,000 home. I entered $100,000 for annual income. How much more inacurate can this stupid thing be? – – EDITOR’S COMMENT – – _ The calculations are fine. You made a simple mistake by entering $100,000 when you should have entered $8,333 as your income. (The calculator asks for “monthly” income, not “annual” income.) I can re-create your results if I put $100,000 in monthly income, $10,000 in closing costs, and $0 in monthly expenses. Maybe you don’t have any credit cards, auto loans, bank loans, student loans or anything like that, but if you do, you need to enter all monthly financial obligations that you’ll be making payments on, in order to achieve accurate results. You can leave out irregular expenses like groceries, gas, utilities and other standard living expenses, and you can leave out any expenses that will be going away as soon as you start your new mortgage (such as rent on an apartment). But other than those types of things, lenders will factor in all your ongoing financial obligations into your prequalification calculations, so remember to include those. Please try your calculations again. I’m sure you will find that it will work well for you!

Hmmmmmm. I just did this for a kick because we received our actual prequalification letter today. This calculator pre-qualified us for $130,000 LESS than our actual prequalification and for a payment that is almost $200 below what we are currently paying for rent. Not very accurate. – – – – EDITOR’S COMMENT: Actually, the calculator is accurate, but there’s no law that says a given lender has to stick to the industry standard when deciding how much to lend you. Your lender is allowing you to stretch yourself thinner than most other lenders would feel comfortable with. Perhaps you have savings or other assets that could be converted into cash if you get into trouble, and this has raised your lender’s confidence in your ability to repay. Or perhaps you’re about to finish up a degree that will increase your employability significantly. Something has convinced the lender to lend you $130,000 more than would normally be practical. As to your other observation, the reason the calculator produced a lower payment is, of course, if you were to borrow $130,000 less, your monthly payment would be considerably lower that what your lender quoted you. Let me end with a note of friendly, cautionary advice. Borrowing as much as you possibly can is not the only path forward. If you can be happy while living below your means (finding a way to enjoy life while keeping your living expenses lower than average for your income), you will be less likely to find yourself plagued by future financial worries, you’ll be able to pay cash for items you would othewise find yourself financing (such as furniture, vacations and automobiles), you’ll be able to save more for emergencies, and you’ll be in a better position to plan for a more enjoyable retirement. Please forgive me if I am being forward in saying this. It’s just something to consider – some solid advice from my father to me, and now to you.

My wife and I would like to buy investment rental property. – – – EDITOR’S REPLY: We at Calculators4Mortgages wish you well with your investment goals. Exploring the purchase of rental property as a valuable element of your investment strategy is a good idea. While we would like to be of assistance, this site is currently geared toward people who are purchasing a home to serve as their primary residence. We would like to expand into real estate investment calculators at some point, but we have no immediate plans to do so.

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Wells Fargo & Company (NYSE: WFC), Bank of America Corporation (NYSE: BAC) – 6 Large


#subprime mortgages

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6 Large Companies That Do Subprime Lending

For home buyers who have a solid credit score and other favorable financials, getting approval for a home mortgage loan is relatively easy. For buyers who have less than attractive financials, however, life can get a little unpleasant. That is why the subprime market exists: to serve those customers.

From the lender s point of view, approval for a home mortgage loan requires three main things: a sufficient down payment (usually at least 20 percent of the total loan), good credit and the resources to cover the closing costs associated with the buying process.

Subprime loans specialists, however, offer buyers more loan options. Larger, more traditional lenders have seen the profitability of the subprime market and have begun offering the more flexible loans as well.

Wells Fargo

Wells Fargo (NYSE: WFC ) has long been a leading mortgage lender, but the decline of overall lending volume has recently sent Wells Fargo searching for opportunities to recoup the lost revenue. The company feels that it has recovered from the damage done during the first few years of the 2008 financial crisis and is ready to begin extending credit to buyers who are traditionally seen as more of a credit risk.

Capital One

Not too long ago the banking behemoth bought out HSBC, which many believed would, among other things, make Capital One (NYSE: COF ) one of the few – if not the only – major subprime creditor in the country. Company officials, however, say they ve been hesitant to take on subprime borrowers. Capital One recognizes that subprime lending has not been a very successful venture for any length of time for any notable lending company.

JPMorgan Chase

JPMorgan Chase (NYSE: JPM ) was once one of the premier home mortgage lenders in the subprime market and still is to a certain degree. When other banks were running headlong into major catastrophes after the housing bubble burst, JPMorgan Chase managed to avoid many of the issues that its competitors faced. The bank also craftily circumvented much of the anger and scrutiny that other banks took on the chin, and that played a significant role in their Wall Street downfall.

Citadel Servicing

Citadel Servicing is billed as the largest subprime mortgage lender in the United States and has a history of taking on some of the riskiest credit applications ever. They have been known to approve borrowers with credit scores as low as 490 and have successfully managed to make it a profitable endeavor by creating innovative ways of lending. One such way is to repackage loans that have been made into bonds and sell them to investors.

Bank of America/Countrywide

Countrywide, now merged into the Bank of America (NYSE: BAC ) empire, was once one of the country s most successful subprime lenders. Countrywide improprieties that helped pave the way for the 2008 meltdown in 2008, however, have been an albatross for Bank of America, causing it to lose $50 billion. It is uncertain whether Bank of America will continue to be a leader in the industry or even a player in it.

GM

The subprime lending branch of General Motors (NYSE: GM ), GM Financial, finances auto loans and leases. GM Financial specializes in loans to those who have credit scores less than 620. The company recently received a subpoena by the Department of Justice for documents relating to its operations going back as far as 2007.

2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.


How Subprime Mortgages Work #capwest #mortgage


#subprime mortgages

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How Subprime Mortgages Work

Owning a home has long been touted as the American dream — a palpable opportunity that the economy would ideally be able to provide to every working family. However, various factors in the complex financial system caused the housing market in the United States to go through a dramatic boom and bust during the first decade of the 2000s. One of the factors that caused both the rise and dramatic fall of the market was the use of tricky lending programs, called subprime mortgages, which enable people with shaky credit ratings to secure home loans.

The practice of lending money to people with a weak or limited credit history is called subprime lending. One misconception about the term subprime is that it refers to the interest rates attached to the loans. Subprime generally refers to the credit rating of the borrower. Subprime borrowers generally have a credit score below 620 on a scale of roughly 300 to 850 (or 900, depending on the particular scoring system used). Most consumers land in the mid to high 600s and 700s [source: Bankrate.com ]. However, during the housing boom, many who could have qualified for a traditional home loan instead took out a subprime loan, partly due to aggressive mortgage broker tactics, such as approving loans more easily or not fully explaining stricter repayment terms [source: Brooks ].

The interest rates on subprime mortgages can vary wildly. They’re partially based on a variety of risk-based factors including:

  • Credit score
  • Size of down payment
  • Number of delinquencies (late payments listed on your credit report)
  • Types of delinquencies

The sharp rise in subprime mortgage lending began in the mid-1990s and accounted for roughly 20 percent of home loans in 2006 [source: Federal Reserve ]. On the plus side, subprime mortgages allow people with poor credit a chance to get into a market previously unavailable to them with standard home loans. The downside of this scenario is that these loans are more likely to go into default, meaning that the borrower fails to make payments on the loan. The large number of foreclosures from subprime mortgages has had a drastic impact on the U.S. housing bust and overall economy. Lenders were also hit hard, with some going under completely.

Another negative aspect of the subprime market is the rise in accusations that lenders target minorities — a practice known as predatory lending. These lenders prey upon the inexperience of the borrower in many ways. They may overvalue your property, overstate your income or even lie about your credit score in order to set sky-high interest rates. They also encourage frequent refinancing to get a better rate, and then roll the high closing costs in to the loan.

In this article, we’ll look at some examples of subprime mortgages to help you determine whether one might be right for you. We’ll also examine the subprime crisis and what’s being done about it.

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#mortgage underwriter jobs

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