The Home Affordable Foreclosure Alternatives (HAFA) program is for borrowers who, although eligible for the government Home Affordable Modification Program (HAMP), are not able to secure a permanent loan modification or cannot avoid foreclosure. HAFA provides protection and money to eligible borrowers who decide to do a Short Sale or a Deed-in-Lieu of Foreclosure.
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As you’re comparing quotes, ask whether any of the lenders would allow you to buy discount points, which means you’d prepay interest up front to secure a lower interest rate on your loan. How long you plan to stay in the home and whether you have money on-hand to purchase the points are two key factors in determining whether buying points makes sense. You can use this calculator to decide whether it makes sense to buy points.
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CalHFA MAC provides homeowners with “satisfied” copies of their Promissory Note and Deed of Trust within 30 days of their Promissory Note’s scheduled maturity date. CalHFA MAC also submits paperwork to the county where the Deed of Trust was recorded with instructions to release the Deed of Trust. This document is called a Reconveyance and it will be sent to the homeowner as soon as the county completes the release of lien process.
A grant is an award of money that does not need to be repaid. Grants are typically provided by non-profit organizations, housing agencies, state governments, and the federal government. Awarded funds are only usable for the purpose for which they were offered and most agencies require recipients to submit periodic updates demonstrating how the funds were used to ensure that they were not misappropriated.
Short sale can be an alternative to a foreclosure, and it will allow you to sell your home for less than the current outstanding mortgage balance on it. While this can be a drawn out process and take time, this option is becoming more common and acceptable by banks, real estate agents and servicers. Learn more on how short sales can stop foreclosures.
Don't forget miscellaneous expenses. Be sure to budget for moving expenses and additional maintenance costs. Newer homes tend to need less maintenance than older ones, but all homes require upkeep. If you're considering a condo or a home with a homeowners association (HOA), remember to include HOA dues in your budget. Keep in mind that you should have an emergency fund on hand to prepare for any unexpected changes in your income (like reduction in your wages) or unexpected expenses (like medical bills).
This is the number of years during which you will be making payments on your mortgage. The most popular mortgage is a 30-year fixed, with 15-year fixed coming next. Common terms for fixed mortgages are 15 and 30 years, but some banks offer mortgages in other five-year increments from 10 to 40 years. Stretching out payments over 30 years or more will mean that your monthly outlay will be lower, but the overall cost of your home will be more because you’ll be paying interest for more years. To make your home cost less, choose a shorter term, such as 15 years.
With a fixed-rate mortgage, the interest rate will not change over the life of the loan. It's a good choice for someone who likes the certainty of knowing the mortgage payment will never go up. ARMs start with a lower interest rate for the first few years and adjust after a predetermined period (usually five years) based on the housing market. This type of loan can seem risky as interest rates have the potential to rise significantly, but there are caps in place to keep the rates from rising to astronomical levels.
Fixed-rate mortgages offer stability in your mortgage payments. However, many ARMs start with a lower interest rate than fixed mortgages and lock the rate in for a few years. That can mean significantly lower payments in the early years of your loan, so some borrowers opt for an ARM with the intention of selling or refinancing their home before the rate can adjust.
The good news for today’s FHA borrowers is that roughly 3,000 zip codes got a 7-percent hike in FHA loan limits this year. Now homebuyers can borrow up to $314,827, an increase from last year’s $294,515. In more costly areas, loan limits rose to $726,525 from $679,650. These higher limits offer buyers access to a bigger piece of the market, especially as home prices continue to climb upwards.
Investopedia’s Mortgage Calculator is based on a complex formula that factors in your mortgage principal (how much you are borrowing), the interest rate you’re paying and the duration of the loan to determine how much that monthly mortgage payment will be. It lets you try out different scenarios of how much you might borrow and what varying interest rates will do to the amount you’ll be asked to pay. Read below to understand what each of these terms mean.
Depending on your financial position, there are many different types of mortgage assistance program available to you. There are two classes of program: government-sponsored and lender-sponsored. Government-sponsored home mortgage assistance tends to be broader in scope and easier to acquire, but less tailored to your individual needs. Remember that the point of government assistance is to free up cash for you to spend elsewhere. Lender-sponsored assistance, meanwhile, is designed to float you through rough patches so you can eventually pay them back. These loans, grants, modifications and agreements are tailored to make sure that the lending company doesn't lose money on you.
You may not receive mortgage approval the first time around. Sometimes you're just shy of meeting program qualifications. It happens. But, it doesn't mean you should be written off as a customer. Be sure to choose a lender who sees you for you, not just your credit score. At American Financing, we'll guide you through credit weaknesses and next steps, getting you one step closer to mortgage approval.
In addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, home inspections and title searches. You can also defray costs by asking the seller to pay for a portion of your closing costs or negotiating your real estate agent's commission. Calculate your expected closing costs to help you set your budget.
Prepare to spend some time sitting back and waiting. Each application is thoroughly reviewed by the grant-making agency, sometimes causing a long lag time between when you submit your application and when you are notified about the decision. In the meantime, don't stop making your mortgage payments, or at least pay as much of them as you are able to, or it may look like you aren't taking your mortgage obligation seriously.
Amortization is what you are actually paying per year against your loan. You can get a mortgage with a term of 10, 15 or 30 years. You pay each month and the principal decreases until it’s paid off. The payments don’t change but at the beginning of the term, most of the payment is going toward interest. By the end of the term, that’s flipped and you’ll be paying down the mortgage principal.
Since there are so many different types of mortgage loans, it can be difficult to choose the best loan for your needs. If you want a set monthly payment and a definite period of time to pay off the loan, you should look primarily at home mortgage loans. This is a good option if you want to remodel, and you know exactly how much it is going to cost. A home equity loan gives you added flexibility since it is a revolving line of credit. This is a good option if you have several smaller projects you are working on and you are unsure of how much each will cost. It also gives you the opportunity to withdraw the money to cover other expenses like a wedding for your child or to help cover college expenses. Either option does put your home at risk if you default on your payments, even if you are current on your first mortgage. It is important to carefully consider your budget to make sure that you can afford the payments. Once you do this you can be confident in moving forward on either type of loan.
Many real estate agents want you to be pre-qualified for a loan before they will start to work with you. The mortgage pre-qualification process is fairly simple, usually just requiring some financial information such as your income and the amount of savings and investments you have. Once you are pre-qualified, you will have a better sense of how much you can borrow and the price range of the homes you can afford.
Down payment minimums vary and depend on various factors, such as the type of loan and the lender. Each lender establishes its own criteria for down payments, but on average, you’ll need at least a 3.5% down payment. Aim for a higher down payment if you have the means. A 20% down payment not only knocks down your mortgage balance, it also alleviates private mortgage insurance or PMI. Lenders attach this extra insurance to properties without 20% equity, and paying PMI increases the monthly mortgage payment. Get rid of PMI payments and you can enjoy lower, more affordable mortgage payments.
Once you find a home you want to put an offer on, you have to obtain the actual mortgage loan. Apply for a loan with your chosen mortgage lender. Within three days of your application you should receive a loan estimate that includes closing costs, the interest rate, and the monthly amount you’ll pay for the principal, interest, insurance, and taxes. After that, it’s off to the underwriter, who will review all of your financial information and make the final call to approve or deny your loan.
One of the easiest ways to obtain a mortgage loan is to work with your existing bank. If you already have a relationship with a bank in the US, the process of applying for a mortgage is relatively painless. However, you may find that your bank can't provide you with the best possible deal. It can pay off to speak with underwriters at different financial institutions. In addition to mortgage rates, you should also ask them about their origination fees and various closing costs and fees.
Bank of America Foreclosure Prevention - From January 2008 thru current, BOA has modified hundreds of thousands of mortgages. Some of those home loans were originally issued and held by Countrywide. Bank of America offers homeowners several foreclosure and mortgage assistance programs, including modifications, principal reduction, short sales, interest rate reductions and other resources. The lender also has opened help centers in many major cities, which provide homeowners with one on one counseling and free advice. Read more on all of the Bank of America foreclosure programs.