PMI, or private mortgage insurance is required on any 1st mortgage with a loan to value of 80% or greater. Contrary to what many believe, its purpose is to protect the lender (not the mortgage holder) in the event of a default on the mortgage. As you pay down your mortgage to below 80% LTV (most require you to pay down to 78%), you should consider what your options are for getting rid of this extra payment.
1. Keep up with homes are selling for in your neighborhood. If you are at 78% loan to value based on what comparable homes are selling for, then simply call your lender to discuss this with them. Personally, I would call even at 80%. They may require you to put your request in writing and they may require an appraisal which you will need to pay for.
2. Refinance. If you know that your home would appraise for at least 20% more than you owe, then perhaps a refinance should be considered. This can accomplish many goals such as reducing your rate or converting an adjustable rate to a fixed rate at the same time. Just know that you will incur fees so make sure there is room for those fees within the 80% loan to value ratio.
3. Pay Down Your Mortgage aggressively. If you aren't close to being at the 80% LTV, then you need to look at how you get their as quickly as possible. You can pre-pay principal to make this happen, but the absolute best way to pay down your principal in the fastest amount of time is with a Money Merge Account. The Money Merge Account is a new system being used by thousands of homeowners across America to reduce their mortgage by 1/3 to 1/2 with out refinancing. It's not for everyone, but currently, you can get a FREE Mortgage Savings Analysis from MortgageZapper.com. I highly recommend the Money Merge Account as a valuable financial planning tool. It will not only help you reach your goal of paying down your mortgage to reduce PMI, but will help you achieve the seemingly unattainable goal if paying off your mortgage completely.
Once you get that extra $50 - $200+ in your pocket every month, I strongly recommend speaking with an investment advisor to discuss the best way to make it grow even further.
Friday, May 30, 2008
Tuesday, May 13, 2008
What Lenders Could Have Done to Avert the Foreclosure Crisis
I was chatting with a friend yesterday about her upcoming balloon payment on her mortgage. Like many, she owes more than what the house is worth and we talked about options such as contacting the lender to modify the loan, or paying down enough principal over the next few years to get back to an equity position.
She asked why the banks don't want to work with customers to avoid the losses of foreclosure and that is a very good question. In fact, as I chatted with her, I told her that the lenders really could have avoided their own fate in some ways. I think that extending the fixed periods on ARM's would have been a far better solution that taking back homes, then going out of business - but I guess they didn't. Looking even further back, I guess they could have not made so many "dead man" loans (i.e. loans to anyone with a pulse). As with every other debacle of the banking industry, the government is stepping in to try and right their wrongs with the Foreclosure Prevention Act of 2008.
She asked why the banks don't want to work with customers to avoid the losses of foreclosure and that is a very good question. In fact, as I chatted with her, I told her that the lenders really could have avoided their own fate in some ways. I think that extending the fixed periods on ARM's would have been a far better solution that taking back homes, then going out of business - but I guess they didn't. Looking even further back, I guess they could have not made so many "dead man" loans (i.e. loans to anyone with a pulse). As with every other debacle of the banking industry, the government is stepping in to try and right their wrongs with the Foreclosure Prevention Act of 2008.
Monday, May 12, 2008
Two Words That Will Make you Millions in Real Estate Investing
I have been involved in the real estate industry in some form since 1992. As I came through the ranks, I learned from several seasoned real estate veterans that has made lots of money in the business. I went on to use many of their strategies and made plenty of money in real estate myself.
Years ago (probably around 1995) a real estate "guru" shared with me two words that he said would be the key to my success in real estate investing. Do you know what those two words are? "Make Offers" He went on to say "to get deals, you've got to make offers". Just imagine how much money you'd make on one real estate transaction (buying low and selling high). If it was conservatively $10,000 and you have to make 20 offers to get that one deal, would you do it? Considering an offer doesn't take that long to make, that would be $500 per offer you made - not too shabby.
The big question of course, is where to find properties to make offers on. Here are a few ideas:
1. Check the classifieds. This has worked forever, and still does. Try Craigslist.com and backpage.com for online ads.
2. Here is a free publication you might enjoy this. It's called "How to Buy a Home at a Discount". It is a free download (no registration, no email required):
http://www.bankownedassets.com/dl/discounted-homes.pdf
3. Finding pre-foreclosure properties. There is much to learn regarding pre-foreclosures, but the profit margins are almost always higher:
For more info check out: http://www.bankownedassets.com/pre-foreclosure
4. Banks often list their properties for sale. You can find a free list of banks here: http://www.bankownedassets.com/
5. Do you want to have periodic emails sent to you with homes that come available in your area which saves you time of looking through all of the bank lists, then you can visit the BankOwnedAssets.com Nationwide Foreclosure Center and subscribe. There is a small fee for this, but you can unsubscribe at any time.
6. Would you rather just call a local real estate agent that works with foreclosures in your area? You can request that by filling out this form:
http://www.atozlender.com/real-estate-agent-referral.cfm
7. Do you need to be pre-qualified for a home mortgage? If so,
visit: http://www.atozlender.com
8. Unsure about your credit rating? Check it here: Credit.com
9. Does your credit rating need improvement? Check out these professional and do-it-yourself credit repair resources:
http://www.bankruptcymortgagebook.com/credit-repair.htm
I think that covers it. If you have any other questions, please do not hesitate to contact me.
Years ago (probably around 1995) a real estate "guru" shared with me two words that he said would be the key to my success in real estate investing. Do you know what those two words are? "Make Offers" He went on to say "to get deals, you've got to make offers". Just imagine how much money you'd make on one real estate transaction (buying low and selling high). If it was conservatively $10,000 and you have to make 20 offers to get that one deal, would you do it? Considering an offer doesn't take that long to make, that would be $500 per offer you made - not too shabby.
The big question of course, is where to find properties to make offers on. Here are a few ideas:
1. Check the classifieds. This has worked forever, and still does. Try Craigslist.com and backpage.com for online ads.
2. Here is a free publication you might enjoy this. It's called "How to Buy a Home at a Discount". It is a free download (no registration, no email required):
http://www.bankownedassets.com/dl/discounted-homes.pdf
3. Finding pre-foreclosure properties. There is much to learn regarding pre-foreclosures, but the profit margins are almost always higher:
For more info check out: http://www.bankownedassets.com/pre-foreclosure
4. Banks often list their properties for sale. You can find a free list of banks here: http://www.bankownedassets.com/
5. Do you want to have periodic emails sent to you with homes that come available in your area which saves you time of looking through all of the bank lists, then you can visit the BankOwnedAssets.com Nationwide Foreclosure Center and subscribe. There is a small fee for this, but you can unsubscribe at any time.
6. Would you rather just call a local real estate agent that works with foreclosures in your area? You can request that by filling out this form:
http://www.atozlender.com/real-estate-agent-referral.cfm
7. Do you need to be pre-qualified for a home mortgage? If so,
visit: http://www.atozlender.com
8. Unsure about your credit rating? Check it here: Credit.com
9. Does your credit rating need improvement? Check out these professional and do-it-yourself credit repair resources:
http://www.bankruptcymortgagebook.com/credit-repair.htm
I think that covers it. If you have any other questions, please do not hesitate to contact me.
Wednesday, May 07, 2008
How your credit will affect your mortgage terms
Do you know your credit score? Well you should, especially if you are trying to get a home mortgage. Lenders will look at your credit scores from all 3 credit reporting agencies and based on the middle of three credit scores, sometimes referred to as FICO scores, here is how you will do:
> 720 - You can basically write your own ticket and just about get a signature loan based on the fact that you have proven that you know how to handle credit and have made keeping a strong credit score a priority. It also probably means that you are blessed to have not had any unforeseeable losses such as job losses, divorce, illness, etc which often ruins the credit of hard-working people. Trust me, I know this first hand.
680 - 719 - This is an ideal credit score range for getting a home mortgage with a minimal down payment, minimal fees, and optimal loan rates.
620-679 - This is where many borrowers fall, and most borrowers won't have trouble getting a loan here as long as they are not trying to use alternative loan documentation .
560-619 - These borrowers may have trouble getting traditional loans with minimal down payments. Options are sub prime loans or government loans (FHA).
500-559 - Borrowers here will have VERY limited options, due to their poor credit histories and most will not qualify for a loan. I strongly recommend getting the credit issues fixed, rather than over paying for a home loan. See below for info on getting your credit fixed.
< 500 - The only loan options available to people with less than 500 credit are hard money lenders, and I do not endorse them. If you have less than a 500 credit score, we are not able to assist you as we do not want to be associated with hard money loans. Also, you have to think about whether or not it is the right time for you to get a loan. If you get into a home and can't afford it, you really haven't accomplished anything for the long haul.
If you don't know your credit scores, visit credit.com to get your scores and get on your way to home ownership.
If you need credit repair assistance, the only company I can recommend is Lexington Law , a nationwide law firm specializing in credit repair.
I hope this is helpful in your journey to become a homeowner. Please contact Consumers Advantage Mortgage to apply for a home loan when you are ready.
> 720 - You can basically write your own ticket and just about get a signature loan based on the fact that you have proven that you know how to handle credit and have made keeping a strong credit score a priority. It also probably means that you are blessed to have not had any unforeseeable losses such as job losses, divorce, illness, etc which often ruins the credit of hard-working people. Trust me, I know this first hand.
680 - 719 - This is an ideal credit score range for getting a home mortgage with a minimal down payment, minimal fees, and optimal loan rates.
620-679 - This is where many borrowers fall, and most borrowers won't have trouble getting a loan here as long as they are not trying to use alternative loan documentation .
560-619 - These borrowers may have trouble getting traditional loans with minimal down payments. Options are sub prime loans or government loans (FHA).
500-559 - Borrowers here will have VERY limited options, due to their poor credit histories and most will not qualify for a loan. I strongly recommend getting the credit issues fixed, rather than over paying for a home loan. See below for info on getting your credit fixed.
< 500 - The only loan options available to people with less than 500 credit are hard money lenders, and I do not endorse them. If you have less than a 500 credit score, we are not able to assist you as we do not want to be associated with hard money loans. Also, you have to think about whether or not it is the right time for you to get a loan. If you get into a home and can't afford it, you really haven't accomplished anything for the long haul.
If you don't know your credit scores, visit credit.com to get your scores and get on your way to home ownership.
If you need credit repair assistance, the only company I can recommend is Lexington Law , a nationwide law firm specializing in credit repair.
I hope this is helpful in your journey to become a homeowner. Please contact Consumers Advantage Mortgage to apply for a home loan when you are ready.
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