7 Things Your Mortgage Company Hopes You Won’t Find Out
So you looked for months and months and one day you discovered your dream home. Next step, how do I pay for this wonderful home?
Before trotting over to the local bank or mortgage company, there could be some things you need to know. There are some things mortgage companies won’t tell you. Knowing them will make help you avoid potential pitfalls that could delay or prevent you securing the loan necessary to secure you dream home.
1. You’re not dealing with an independent mortgage broker. Usually, you run to a mortgage broker when you want to obtain a loan for a home. That’s fine, as it means you don’t have to sweat even the small stuff. However, what you don’t know is that the mortgage company is actually paying these brokers for referrals. Thus, you are not sure if the product offered to you is something that you need or an expensive one that allows both the mortgage companies and these brokers to earn more money.
2. You’re not getting the lowest possible interest rate. You really can’t expect lending companies to offer you the possible lowest rate in the market, can you? After all, how can they earn money out of every transaction? Expect the interest rate to be slightly higher, perhaps 1 or 2 percent than the actual percentage. Now, it’s up to you to decide if the extra charges are something you are willing to accept or not.
3. You are obtaining the right loan. Surely, you’ll meet loan companies telling you that you deserve something better. Thus, they end up offering you a package that is expensive. You may hardly notice it, though, since it’s something that is still within your budget.
4. You will be paying a lot more in your foreclosures. A lot of home owners believe that the costs will end at the back mortgage payments, but they are wrong. There are still a lot of costs to think about including attorney’s fess and commissions of the sheriff. These payments, which can go as high as $8,000, need to be paid before you can get a new mortgage again.
5. There’s no such thing as pre-qualification. Or we can say this as your prequalified status doesn’t have any bearing at all to your qualification. You may have an excellent credit score, a faithful payee, and working class; but unless the information in your loan application have been verified and confirmed, what you say or write will mean nothing to the mortgage company.
6. You can cancel your mortgage insurance. Mortgage insurance doesn’t come cheap, but your mortgage lender will tell you that you need it since you can hardly make the 20 percent down payment. You can only cancel it once you do. The Homeowners Protection Act, however, will tell you that once your home’s equity reaches 22 percent, the insurance should be cancelled automatically—but home owners will always have a choice to do it even before it goes to that percentage.
7. They can’t help you if you can’t help yourself. They may promise the moon and the stars, but in reality, these companies will not be able toprovide you of the help that you need if you don’t give them sufficient and accurate information. And with so many applications to worry about, spending more time on yours is definitely not their cup of tea.
Michael McLaughlin
http://www.articlesbase.com/real-estate-articles/7-things-your-mortgage-company-hopes-you-wont-find-out-755988.html
Comments
Foreclosure issue: how does this sound?
I have to write about the foreclosure issue and I wanted to know how this sounded so far. Does it make sense (I have to write 1,000 words) or should I go in a different direction? Where can I find more information to back up what I’m saying?
When I heard about the foreclosure issue, I had already heard about the situation from my parents, bosses and other friends. It seemed as though everyone was talking about a crisis that didn’t seem to be getting any better. I started talking to these people about any solutions they might have, hoping to spark an idea in myself at the same time.
Going around my college dorm, I found people with some pretty wild ideas. One person suggested eliminating paper money and another thought bringing back the railroad might help. I thought it was pretty interesting that everyone seemed focused on other areas of the government to fix the problem and not on the foreclosure issue itself. Everyone felt there wasn’t enough money to even touch the issue-money first needed to be found somewhere else, they said.
I finally found my answer when I talked to friend Amanda. She was complaining about the fact that many small businesses in our little town of Whitewater were closing. “If businesses weren’t taxed as much, they’d probably be able to stay afloat.”
She then went on to explain that businesses are taxed higher for each employee they hire. Therefore, businesses try to hire the least amount of people. This, in turn, cuts down on the number of jobs that are available for people. And when a person doesn’t have a job, he or she usually has to sell things just to keep food on the table. If you can’t pay your bills, then you have no money to pay on your mortgage. Eventually, if you can’t repay your loan, you will lose your house. And that’s how the foreclosure crisis gets started.
If businesses weren’t taxed for hiring employees, then more jobs would be available. If more jobs were available, people could afford to purchase homes and to pay off their mortgages. If people have more money in their pocket, they are more willing to spend money in the economy, which would mean more business would stay afloat. If more businesses are alive and blooming, then companies won’t have a reason to let employees go.
Okay, so I guess I should explain what I’m supposed to write about:
We are looking for the most creative ideas on how to solve the current foreclosure crisis.
We’re currently experiencing a very challenging and volatile period in real estate because of a recession that has hit homeowners everywhere very hard. It’s possible that it could still get worse before it gets better.
So you are asked to write about: "How to solve the foreclosure crisis"
Okay, I understand that it sounds like I’m stupid and don’t know what I’m talking about…
But you see, the point is to find a new way to solve the current issue that hasn’t been thought of before. Everyone knows the lenders are lending out money to people who can’t pay…my point was that maybe we should get people jobs…and then if they have jobs, they will at least be able to pay more…but now I think we need to solve both issues at once…anyway, this was a quickly rushed out copy so I didn’t spend a lot of time writing a paper that was clearly wrong…as you all quickly jumped on me to point out…thank you very much, I already got that…
Poorly written for a college student. Your opening is boring, the second sentence just repeats the first. Your concept is great but lacks the proper wording.
Hearing the word foreclosure on everyone’s lips and numerous articles on the subject, I started thinking about solutions. Getting input from others was my first step in formalizing a plan.
Middle section is good. But you omitted the biggest cause being consumers purchasing a home without full consideration of the true cost. Too many interest only loans, failure to add in the cost of Insurance and property taxes.
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You seem to have turned an assignment about foreclosure into a discussion of taxation of small businesses based on their number of employees. Specifically what type of tax is based on the number of employees? SSI and FICA are witholdings from the employees’ paycheck. Unemployment insurance isn’t a tax. Hiring more employees can actually reduce the business tax burden.
Business #1 has $250,000 gross profit and has 2 employees and each is paid $50,000 – $150,000 in pretax income 33% tax rate; $50,000 in taxes due
Business #2 250,000 gross profit as well but has 3 employees at $50,000 – $100,000 in pretax income 33% tax rate $33,000 in taxes due
Make sure that your basic premise makes logical sense before writing an entire essay around it.
Businesses are taxed on a progressive scale when they are profitable. Too many businesses are less profitable today due to decreased revenue from lack of demand and overseas competition.
Businesses are currently hiring the least amount of people for two reasons: 1) Revenues are still trending down although they are stabilizing – businesses usually increase hiring when they expect an increase in demand for their product. 2) There are very few indications that 2010 will be significantly up from 2009, so most businesses are trying to reduce their costs for the short term and survive until business improves. So they are hiring only the people that are critical right now.
The foreclosure issue primarily stems from the fact that people overextended themselves by buying homes and living a lifestyle that they ultimately could not afford in the long run.
—-> I read your addendum. Before looking for solutions to the foreclosure issue, you need to understand the root cause(s). So, if you agree that people bought homes that they cannnot afford, the solution is that they either sell them in a short sale or they lose them to foreclosure. The exact same process happened in southern california in the late 80s.
If you don’t have a job and have no savings, then you will eventually lose your house. If you are working and are coming up just short of making your bills, a mortgage modification may help. Take all homeowners with decent credit that are in exotic mortgages and offer them the opportunity to rollover their mortgages at face value to 30-50 year fixed rate mortgages that they can better afford. They will be able to stay in their homes and pay off on a lower monthly amount for a longer time period. Most mortgage backed securities are trading at 60-70% of principal value, so the transition from a 30 year exotic mortgage to a longer traditional mortgage will be close in value for the mortgage investors. No one will be able to help every homeowner, some are simply too far overextended.
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You have not written a paper about foreclosure.
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This has nothing to do with foreclosure. Do you understand the terminology?
I am sure the people in your dorm do not know much about the subject.
Writing a paper requires researching the subject and answering the question asked.
Talking to people does not qualify as research – that is interviewing.
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