A Rise in Divorce Sales

Lately there has been a rise in the number of home sales that have come about because of divorce. Meeting their mortgage payments have been something that have caused some trouble in many people’s lives. The money struggle is very serious and this is something that people should never want to face in their lives. Divorce home sales are very tough to handle sometimes. This currently has shown that it might not be a coincidence, and more likely be related to the current thought of mortgage crisis.

Why is This Causing Divorce?

Well, these couples are facing troubles. They are deciding that it is a very constructive practice to blame each other for their struggles! They don’t decide that they will try to fix the problems, but decide separation is easier. Then these people have trouble deciding what to sell the house for! It seems like a never ending, vicious cycle. All this blaming of each other can lead to much more anger being thrown around. In the end all this results in another home being placed on the market.

What Can We Conclude From This?

While this could be a very serious issue it is more likely to become clearer within the next few months. This might be a trend, but it also might not. One thought is that the relationship was headed from a downfall and all it needed was a little money troubles to push it over the edge. These people have probably thought about it before and needed a reason. It is very unlikely that a happy couple goes straight to divorce within a day because of this.

Well then who is too blame? Simply put, they both are! They were the ones who got into this mortgage, and they did it together. A lot of people who are feeling the heat from their mortgage did not put in the time or effort to figure out if they could really afford this home. Many people just jump into it without even giving it much thought. This is why you need to take the time and really assess what is going on in your life personally and financially. Money troubles are not something that you want to face, but you need to give yourself a fighting chance. It is not quite clear how mortgage trouble and divorce are working together, this will take a few months. In the mean time you need to assess the mortgage you want to get before you sign on that dotted line. Hopefully this is something that will not affect marriages in the future. It is so important that you put yourself in a position to succeed.

Related:

• How Bad Will the Mortgage Crisis Get?
• Inside the Mortgage Crisis

Looking at those nine years, it turns into nine year of saved interest on your mortgage. Look into the particular additional costs of your mortgage broker. If they will let you make biweekly payments, it could save you money if they don’t require an additional fee.

A Real World Example

Here is how an extra mortgage can actually save you a ton of money:

Lets say you current mortgage was for $200,000 for 30 years at a 6% APR. Your mortgage monthly payment would be $1199.10. Let’s say after five years you are doing pretty will with your income and decide you can afford to pay more, so you decide to start making two mortgage payments each month. So you make two $650 payments every two weeks. This will end up costing you $100 more dollars a month to $1,299. Since you have accelerated your payments you can actually save on your interest and shorten the length of your mortgage. In this case, by adding $100 a month, you shave almost four years and $31,582 off your mortgage.

Just like refinancing a mortgage will lower your monthly payment by extending the length of your loan, making second mortgage payments do the opposite. If you can afford to pay another $100 a month you can really save a lot of money in the long run. It is worth your money, if you can spare it, to shorten your mortgage and pay less interest. Don’t you want $30,000 plus dollars saved in the future? It doesn’t seem like to much to ask to come up with another $100 each month. If you can afford it, it becomes a great idea.

Additional Resources:

• Mortgage Calculators
• Extra Mortgage Payments Can Pay Off

Credit Card and Mortgage Statistics

• About 70% of homeowners are paying for their home through a mortgage.
• Of that 70%, nearly a quarter of them have a second mortgage or home equity line of credit.
• More than 230,000 homeowners are facing some form of foreclosure, which comes out to nearly 1 out of every 500 people.
• Foreclosure filings have more than doubled since a year ago.
• The total US revolving debt is over $900 billion.
• The average household carries $8,500 in credit card debt, however the median balance is just $2,200.
• 1 in 6 families pay only the minimum credit card payment each month.
• Of every $100 spent in the US, almost $40 is spent in a form other than cash or check.

Related:

• AP Poll: Mortgage Payments Worry Many
• Bill Clinton on the Mortgage Crisis

What You Should Bring

• Contract
• Home appraisal and inspection reports
• Good faith estimate
• Flood certification
• Homeowner’s insurance and mortgage insurance if required

Main Purpose of Closing

Sign legal documents: There are several important documents you’ll have to sign here, such as the transfer of ownership of the property and your mortgage terms from you lender. Read all of the documents carefully and make sure they are in line with what you had previously agreed upon. Remember that you can delay closing if necessary.

Pay closing costs and escrow: Now will be the time to pay the fees associated with closing your mortgage. The fees may already be included in your mortgage, you might have a separate loan for them, or they could be paid out of pocket.

Who’ll be there?

• You, and your spouse if they’re involved with the transaction
• Your attorney (not always necessary, but can help you through the process)
• The lender
• The title company’s representative
• Real estate agent, if one was used
• Closing agent

After you’ve completed the closing process, you’ll officially have ownership of the home and the mortgage process will be complete!

Related:

• Know the rules, your rights before your mortgage closing
• The Mortgage-Closing Nightmare

With much of the “baby boomer” population beginning to reach their senior citizen and retirement ages, many people are relying on their home’s equity for income. Their home equity is even more important considering how difficult it has become for many people to have a financially secure retirement. Perhaps the most popular way to utilize home equity is through a reverse mortgage. Reverse mortgages are available to people over the age of 62 and allows home equity to be released through multiple payments or a lump sum to the home owner. It allows people to get the income they need during retirement while deferring their mortgage payments during that period. It’s a great opportunity if it fits your financial situation, but there are some potential hazards you need to be aware of.

Reverse Mortgage Hazards

• When reverse mortgages were first created, they were offered exclusively with adjustable interest rates. As you know, adjustable interest rates are usually a gamble that the homeowner doesn’t end up winning. With a little persistence, you may be able to get a fixed rate.
• One of the major hazards of a reverse mortgage is the rule that states you must pay back any cash you receive from a reverse mortgage if you sell the home or no longer use it as your primary residence. This could be a very expensive debt at a time when you don’t have a lot of extra cash.
• Another possible problem is the high upfront costs of a reverse mortgage. Closing costs are comparable to a traditional mortgage, except there’s also the 2% mortgage insurance premium the FHA charges.
• When you eventually pass on, whoever is the heir to your home will have a choice to sell the home and repay the loan or keep the home and continue paying the loan. However, if they cannot afford to make the payments, they will have to forfeit the home.
• Ask your lender about their policies on home upkeep and repair. Your home’s condition is an important part of the mortgage and you should always have enough money to take care of future repairs.

Related Links:

• A New Mortgage Mess on the Way?
• Before shifting into a reverse mortgage, get all the facts

What Consumers Want

• Lenders need to conduct a realistic and legitimate income analysis of applicants. Many new home buyers get themselves in trouble by purchasing a home they can’t really afford. It’s up to the lender to verify their income and approve them for a loan they can actually afford.
• Homeowners should be able to more easily prove appraisal mistakes and fraud. This would require lenders to monitor appraisers closer, but could also open the possibility of incentives for doing so.
• Lenders should promote APR rates more prominently so consumers can shop based off it. The APR is the one universal factor that all consumers can use when comparing mortgages.
• Eliminate any prepayment penalties. Prepayment penalties are unnecessary and generally do not buy down the rate. At the very least, prepayment penalties should terminate before any rate changes.
• Make significant requirements for mortgage providers. With so many consumers forced to foreclose their homes, there’s a clear need for better protection. Lenders should have to provide reasonable loss mitigation before foreclosure.
• The rules need to cover all aspects of the home market, such as home equity lines of credit and prime loans.

Related:

• Fidelity National critiques new mortgage rules
• Federal Money Mavens Propose New Mortgage Rules

What You Need to Know About the 125% Home Equity Loan?

• With a 125% home equity loan, you’ll be able to borrow more than what you’re home is actually worth, as opposed to just simply refinancing. This is regardless of how much equity you have in your home.
• It’s important to try and get a fixed interest rate or secure interest rate, as it will play a major factor in whether or not you actually get a lower monthly payments. It’s estimated that paying off a fixed rate interest loan over paying off credit card debt can save you three times as much over time.
• If you’ve had a foreclosure in the past or have a damaged credit score, you may find getting a fixed interest rate very difficult. However, you can still save a significant amount of money with an adjustable rate loan. You may have to search for a lender that can help you, but it could be well worth your time.
• As with any major financial decision, you should discuss your plans with a financial advisor before even thinking about getting a 125% home equity loan. Every type of loan has its strengths and weaknesses; you just want to make sure it’s the best fit for your financial situation.

Related:

• 125% Loans
• 125% Home Equity Loans - Danger of Borrowing More Than Home’s Equity

Figure Out What Happened

When you get denied, the lender has 30 days from your application date in order to explain to you why the loan was denied. This needs to come to you in writing. This is referred to as an adverse action notice, and this needs to have a specific reason why you were denied. There are three common reasons why a mortgage has been denied. Insufficient down payments, bad credit history, and high debt troubles are those reasons. These are very correctable, which is truly a good thing.

Get a Second Opinion

Often times lenders will allow you to ask for a review of your case. This will allow you to make a case for why you should be allowed to get this mortgage. You might be able to convince them that you are in fact eligible. If you have had some big unexpected expenses come up it may have ruined your credit. This is something that the mortgage lender would not have known and now can take into consideration.

Continue Your Mortgage Shopping

It is tough to be turned down. But do not let it get you down for too long! You need to continue to shop for a mortgage. Just because one turned you down does not mean the others will follow suit. There may be 10 more lenders out there that really want your business. You need to go and find these lenders. Each lender has a different way of grading your application. You need to go out and find the right one for you.

So do not give up. You may have been turned down for a mortgage but it is not the end of the world. Someone is waiting to take your mortgage. If you get turned down you need to take action. Remember to figure out why you were turned down for that mortgage. Then you need to approach them for a second opinion where you can plead your case and try to sway from to your side. Finally, do not stop searching for a new mortgage. You need to continue to look because there will be someone out there to help you.

Additional Resources:

• First Time Buyers Look to Family for Mortgage Help
• Mortgage Defaults: Find a Way to Help

Saving for Your Down Payment

If you want to put a significant down payment toward your mortgage, here are some tips to start saving for it:

• The first thing you should do is outline a plan for how large of a mortgage you want and how much of a down payment it will require. Now you can start to financially map out what it will take to get there.
• Start your saving immediately! Yes, that does mean making some sacrifices, such as waiting on that new high-definition TV or putting off your vacation this summer.
• Be careful not to over extend yourself. One of the problems that some new home buyers run in to while saving for their mortgage is actually accumulating credit card debt. Saving for your down payment is important but be realistic in your approach.
• Find something you can cut out of your budget each month. There’s a lot of things we waste our money on, for instance, can you live without those premium cable channels until you get your home? How about reducing your cell phone plan or cancelling magazine subscriptions?
• Finally, make sure your down payment is ready to go at least sixty days before your apply for your mortgage.
  Title: Down Payment

Related Down Payment Links

• The Down Payment Hurdle
• Mortgage Down Payment Comparison Calculator

How can I Avoid Mortgage Insurance?

There are usually two ways you can avoid paying for mortgage insurance. At least one of the two should work for you if you cannot afford to pay 20% of the down payment.

1. Depending on your lender, you may be able to avoid paying for mortgage insurance if you accept a higher interest rate on the loan. How much of a higher interest rate may depend on the loan amount and the down payment, but it can be as high as a full percentage point. Now many home buyers would cringe at having a higher interest rate but keep in mind that mortgage interest is tax deductible, while mortgage insurance premiums are not.
2. Your other option for avoiding mortgage insurance involves actually getting two mortgage loans. Generally, you get one loan that covers most of the home, such as 85% of it, and then you get another for 5% and pay the other 10% in your down payment. Your smaller loan at 5% will have a higher interest rate, but you should be able to pay it off very quickly. Even though you’ll be paying a higher interest on 5% of the mortgage, your monthly payments on the two loans will be less expensive than your monthly payments on one loan with mortgage insurance.

Additional Mortgage Insurance Resources:

• Private Mortgage Insurance Basics
• Does mortgage insurance make sense?