Hawaii | Home Loan | Mortgage | Refinance

Archive for May, 2009

Last month there were more foreclosures then ever before, which means they are speeding up not slowing down, as some might say. There’s no doubt homeowners want to avoid foreclosure as do the Banks. Banks do not want foreclosures written on there books, because it runs the risk of the Bank failing. Homeowners usually do not want to lose their homes. This means if the two work together early enough, a solution should present itself.

Most of the foreclosures are due to illegal lending practices at the start of the lending process. Not too long ago, people who were considering getting a new home had to produce a 30 percent down payment, as well as one year of work proof of income; this established that they did have means to buy the home, were good at money management and would likely keep up with loan payments.

Things have changed since then, because New lending laws deemed those practices discriminatory. At the same time loan originators were getting paid large fees, based on the value of the loan. This caused many brokers and agents to break the rules and require less documentation. So with those two aspects combined, it was much easier to get a loan. Buyers and people refinancing didn’t have to prove as much and large loans were given out to people that could not afford them. These loans were commonly referred to as “liar loans.” Most of the bank meltdowns today have come from Banks leveraging mortgage driven securities that lost money because of these bad loans.

Millions of new Homeowners were not completely informed on what they were signing when getting their loans. They ended up agreeing to adjustable rate mortgages, usually with interest only introductory periods. When the rates increased or the interest only period expired, their housing bill usually would triple and most Homeowners could not keep up with the payments.

If you’re facing foreclosure and find yourself in this situation, a loan modification may be your answer. A loan modification is a mortgage plan, were you can get different terms of your loan modified. Think of it as a refinance option, were you can start affording the payments on your home again.

Most mortgage loans are designed around two items, the interest rate and the time period over which the loan has to be paid off. The interest rate is the percentage of the remaining balance that the lender takes as a profit on each payment, if your interest rate is to high, you will find that you end up paying a lot more than your house is appraised for. Most interest rates are compound interest as well and over the lifetime of most mortgages, that can add up to a very large amount.

Loan modifications will either assist in reducing your interest rate or extend the terms of the loan, and sometimes, it will do both. To get a loan modification package you will have to prove to the lender that you have encountered financial hardship and difficulties, that have reduced your monthly income significantly, which has kept you, or will keep you from making your monthly payments.

You will want to get help from a mortgage modification expert to do the negotiating with your Bank. Especially these days, when the servicers are so busy with people calling in for help, they usually just inform victims that they are “working” on the file, or it’s in “processing” and they are waiting for an answer. If you are in losing your home, and the lender doesn’t provide assistance in a timely fashion, you need to find help from somewhere else.

Hiring a loan modification expert can help the process speed up because these people work with the banks all the time, the bank employees know them and will speak to them and get a modification arranged for you. You don’t want to be stuck sitting around waiting for your bank to “approve” a loan mod, while they are secretly intending on taking the home right out from under you. Having a professional mitigator in your corner is the way to go, if you want to get a loan modification before your home sells at auction.

Nick publishes articles for the ForeclosureFish website. These articles provide resources to borrowers facing the loss of a home, describing various methods they can use to stop foreclosure. The site examines numerous options, including mortgage modification, foreclosure refinancing, deed in lieu of foreclosure, filing bankruptcy, and others. Visit the site to read more about how foreclosure works: http://www.foreclosurefish.com/

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Bad credit auto loan refinance are provided by a number of lending institutions whether online or offline. Some companies specialize in providing bad credit auto loan refinance. These companies specifically target those who have poor credit ratings. Bad credit auto loan refinance is a good option if you are currently charged a higher rate of interest and your lender will not provide you with a better interest rate. Bad credit auto loan refinance is very important for people who are paying a higher rate of interest so that they can avail of a lower rate of interest. Bad credit auto loan refinance will allow you to pay your remaining current balance in full and shouldered by a bad credit refinance company. In turn, you will make the necessary payments to the refinancing company.

Bad credit auto loan refinance is especially applicable on loans made from the dealers. Most dealers charged a higher interest rate than other lending institutions. Bad credit auto loan refinance will not only allow you to get a lower interest rate, it will also extend the length of time you need to pay the loan. Due to the longer period the monthly payment will also be lower.

In order to re-establish your credit with bad credit auto loans you need to pay your monthly payments on your bad credit auto loan refinance on time. If you are paying off a loan and you have a record of bad credit then you need to report your loan to all three major credit bureaus so as to re-establish a good credit standing again. Some people apply for a prepaid credit card but this would not help since a credit card does not constitute a loan. The only way to improve your credit rating is to show that you can honor a loan contract with a few years of on time monthly payments on your borrowings. This may not erase your past bad credit history but it will certainly improve your credit score.

Availing of bad credit auto loan refinance is a good way to pay lower interest rates for your auto loans. You can make your application for bad credit auto loan refinance online. Choose from among the numerous bad credit auto loan refinance companies that offer the best interest rate. Once you made the application wait for the bad credit auto loan refinance company to make a decision and approve your application.

Getting assistance from a loan modification company is a sound idea in the case of most homeowners. Working with your lender through one of these companies takes a huge load of responsibility and stress off your shoulders and even increases your chances of a successful negotiation.

Loan modification companies are run by loan modification attorneys and specialists. Besides being trained specifically in modifications, many also have connections with employees in lending offices. This means your chances for approval at least double.

The downside to searching out a loan modification company is that there are hundreds of scam companies across the country, and they’re difficult to spot if you don’t know the warning signs. Often the scam companies seem completely legitimate until it comes time that you should have a completed modification and instead you have an empty wallet.

Scam loan modification companies will almost always charge you an upfront fee for initial consultation, and then continue to tack on fees over a period of time. Usually any other money they ask for besides the upfront “fee” is similarly claimed to help your modification with your lender. Be careful not to believe these lies and if you are dealing with a firm that seems legitimate except they repeatedly ask for money, consider getting in touch with the authorities. The FBI is actively seeking out these companies and is looking to prosecute anyone involved.

Check with the Better Business Bureau before doing business with any loan modification company.

Legitimate companies usually don not charge for the initial consultation, but they do charge for other services. Real companies give you a consultation and tell you the best way to go about your modification, or even if there is no chance you’ll be accepted.

If you are qualified or close to qualified, they will work with you to first fill out your application. Then they will either write the hardship letter for you or assist you in writing a convincing and professional-looking letter. After submitting both of those they serve as a mediator between you and your lender to come to an agreement that both sides can agree on.

Negotiations can take quite a long time, and even after that being approved can take up to eight weeks. However, having a loan modification company handle the paperwork can at least take some of the worry off of your mind. Just be careful which company you entrust your modification with.

For more information about a loan modification company that is right for you, visit the #1 loans modification resource on the net: http://HomeLoanModifications101.com

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The Cash-on-Cash Return is a measure of an income producing property’s interest rate return on invested equity. The ratio is derived by taking the annual net cash flow (i.e., the cash flow available to the investors) divided by the equity invested.

Cash-on-Cash Return = Net Cash Flow / Invested Equity

There are four types of cash-on-cash return: Leveraged, Unleveraged, Before Tax and After Tax. Consider the following examples:

Example 1: Suppose an investor purchases a property for $10,000,000 with an equity investment of 25% – $2,500,000. At the end of the first year, the available cash to be distributed to the investor is $200,000. The leveraged, before tax cash-on-cash return would be:

$200,000 / $2,500,000 = 0.08% x 100 = 8.00%

Example 2: Let’s assume the investor has a federal and state tax rate of 25%. Then, the leveraged, after tax cash-on-cash return would be:

$200,000 x 25% = $50,000

$200,000 – $50,000 = $150,000

$150,000 / $2,500,000 = 0.06% x 100 = 6.00%

Example 3: Alternatively, the investor purchased a property with all-cash for $10,000,000. Since there are no loan obligations, the investor is entitled to all of the net cash flow available. Assuming the property has a net cash flow of $740,000 then the unleveraged, before tax cash-on-cash return would be:

$740,000 / $10,000,000 = 0.074% x 100 = 7.40%

Example 4: Again, let’s assume the investor has a federal and state tax rate of 25%. Then, the unleveraged, after tax cash-on-cash return would be:

$740,000 x 25% = $185,000

$740,000 – $185,000 = $555,000

$555,000 / $10,000,000 = 0.0555% x 100 = 5.55%

Similar to a cap rate, the cash-on-cash return is a simple metric an investor can use to evaluate the potential return of a property (i.e. “risk”) versus an alternate investment such as a US Treasury Bond. It is a reliable tool for stabilized properties but does have several short comings an investor should consider.

Shortcoming #1: Cash-on-cash is most reliable in the first year than in the future years. This is due to the immediacy of the income. Most property buyers try hard to accurately reflect a property’s first year of operations in their pro forma. However, the projections for the following years are all subject to the buyer’s assumptions. Those assumptions can prove wildly incorrect.

Shortcoming #2: Cash-on-cash can be manipulated by the property’s performance both good and bad. A property that is forecast to operate at 93% occupancy but is operating at 95% occupancy may produce a higher cash-on-cash return for the investor. Alternatively, the same property could be at 92% occupancy and the owner may choose to defer certain maintenance items to maintain his cash on cash. In this scenario, the cash-on-cash return may be what was projected but it comes at a future cost as deferred maintenance will need to be performed sometime.

Shortcoming #3: Returns are increased by interest only mortgages. Since a principal payment does not need to be made there is more cash flow available to the investor. This will provide higher cash payments but will reduce the sale proceeds at the end as a greater amount of principal will need to be prepaid

Shortcoming #4: It does not take into account property appreciation. Some investors may opt for lower cash-on-cash returns to invest in a property that has a greater chance of appreciation than purchasing a property with stabilized cash-on-cash returns but little to no appreciation.

Shortcoming #5: The less equity into the property, the higher the cash-on-cash returns. It stands to reason that the less equity used to purchase an asset the greater the returns to the investor. Some may argue this is not a shortcoming. However, consider that by putting less equity into a property up front it increases the risk to the investor when it comes time to refinance or sell especially if the property has had little appreciation or has experience depreciation. If you are tempted to do this make sure that the reward is well worth the risk.

It should be noted that most cash-on-cash returns are quoted before tax. The main reason is that each investor’s tax situation is unique. An investor should use cash-on-cash return as just one of several metrics in evaluating a specific property for purchase.

Apartment Analytics Software, LLC is one of the real estate industry’s leading apartment investment software firms dedicated to providing investors with powerful and easy-to-use analytical tools enabling them to crunch the numbers with ease and make smart investment decisions with total confidence.

www.ApartmentAnalyticsSoftware.com Ph: (800) 853-7255 Email: info@ApartmentAnalyticsSoftware.com

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Streamlining is not really a term that explains the loan product so much as it refers to the amount of paper that the borrower is required to provide to the lender. Generally speaking, the amount of paperwork that is usually demanded during the initial mortgage application is virtually cut in half during a streamline refinance. Appraisals are optional, but in cases where there is little equity built up, the bank may mandate the appraisal of the property prior to issuing a loan. This protects the lender from financing a property that might put the borrower upside down into the property from the get go. Streamlining also refers to the paperwork processing that is required from the lender, and as such the fees associated with a streamline FHA refinance are generally lower than those that are charged for other refinances.

On the flipside, there are some downsides associated with a streamline FHA refinance. For one, this kind of mortgage loan does not permit the homeowner to take out any money. Thus, for homeowners who are hoping to pay off some bills with their built up equity, this is not a possibility. In addition to the foregoing, there are closing costs associated with this kind of loan. They are often a lot less than other loans, and therefore at times give rise to ambiguous advertisements, such as ads which promise no cost refinancing. In fact, these costs may be rolled into the loan — if there is sufficient equity — or they may take the form of a slightly higher than average interest rate to offset the fees.

This kind of semi creative financing makes FHA loans an attractive mortgage for those borrowers who simply want to take advantage of lowered interest rates, but who have no need for any cash-out refinancing. In some cases it shows that the costs rolled into the loan actually add too much money to make this a profitable undertaking and consumers are urged to find alternative means of paying the closing costs. Financing the fees over the course of 30 years adds more eventual costs than the consumer is actually saving. A loan broker or reputable bank can quickly and easily disclose the actual cost of the loan with the help of an amortization schedule that sheds light on the amount of money the consumer is expected to pay as opposed to the amount s/he will expect to save.

Other loan products receive a lot more airtime on radio and television than streamline FHA refinancing, in part because these fiscal vehicles are a lot more profitable for the lender. At the same time, the consumers who actually benefit from a streamline FHA refinance are not as plentiful as you might think. There are plenty of reasons why a refinance should be advantageous to both consumer and lender, and in this case only a select number of homeowners can actually benefit from a redo of their FHA mortgage without the ability to tap into the cash and use it for expenses.

To find the lowest mortgage rates, visit our site at Lender411.com.

Krista Scruggs is an article contributor to Lender411.com.

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People wonder rather or not they should actually do a home loan modification. It certainly is one option to consider if you have fallen behind on your house payments and are having difficulties paying your bills. There are obviously positive and negative things to consider. It is important to remember, however, that if no money is available, then this plan will not work for you.

When a home loan is modified, the terms and conditions of the loan change, which lowers the mortgage payments. The interest rate can be negotiated with the financial institution. Also, the amount owed on the principal debt can be negotiated and you may also request an extension for the period of time to repay the loan.

The important thing to remember is that this may allow you to keep your home and also avoid the finance charges of completely refinancing the loan. If you can qualify, find a financial institution that will work with you, and make the lower payments, then home loan modification is the answer for you.

On the internet, you will be able to find various hints and ideas that can help you with the changes you want to make on your mortgage payments and modifications. These sites can give you ideas on how to deal with financial institutions and find the best value for your home mortgage modifications. You will find it easier to deal with a different financial institution than where your current loan is, as they will not be as willing to compromise on the terms already set up.

It helps to remember, also, that lenders do not actually control the loans. Instead, they just give loans and receive payments for larger companies. Home loan modification can be an excellent decision for you. However, get advice from the experts and proceed slowly so you can get the help you need to keep your home and get your finances under control.

For additional information and useful resources for home loan modifications, visit the #1 loans modification spot on the net: http://HomeLoanModifications101.com

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