Anne Arundel County Real Estate

This story in the Washington Post: Mortgage Rates Change in the Blink of an Eye highlights the uncertainty in today’s real estate market.

A lot of factors go into making things uncertain right now. For instance, the media continues to foster the idea of a national real estate market - when no such market exists. All real estate markets are local or regional. And now that the government is working an economic stimulus plan through the system, more and more volatility is going to be present in the markets as the mortgage industry figures things out.

In the mean time keep the following in mind: if you’ve been in your house for more than three years, and you’re looking to buy another house that you’ll be in for more than three years - then now is an excellent time to move-up. Interest rates continue to be at or near historical lows, government backed lending limits have been raised to all time highs, and your house has still gone up in value (at least in Anne Arundel county and surrounding areas).

Have your lender keep an eye on interest rates and make sure you lock in your rate when the time is right. Locking in the interest rate on a mortgage loan before it goes to settlement can save you money if rates go up after you lock. At the very least, a rate lock allows you better plan for closing - since you’ll know what your interest rate and cash requirements will be at the settlement table.

Keep in mind however that lock-ins only last so long - usually 30 to 60 days - so if you don’t have a firm date for your settlement within that time frame you might have to pay extra to keep the locked in rate if interest rates go up. This is especially worrisome when it comes to new construction which may be delayed due to weather or other problems, and it can also be an issue if you’re buying a home but don’t yet have yours sold - but you need to in order to qualify.

Get yourself ready to lock-in at a low rate by getting the appraisal done early, providing all necessary paperwork to your lender, and staying in contact with your lender.

Once you get everything done and you feel comfortable with where the rates are today - be ready to act if rates drop to where you want them.

I spoke to one mortgage guy last week who said that rates dropped low but only for a few hours. He called up his clients and asked them if they wanted to lock (most did). A few said they wanted to think about or they wanted some additional information. By the time they were ready to make a decision, rates had already gone up again.

If you’ve fallen behind in your house payments and you are worried about a possible foreclosure - there may be an answer.

If you can currently make your regular payment, but you can’t catch up with the past-due amount - you might be able to negotiate with your lender to fold any past-due amounts, including interest and escrow, into the unpaid principal balance and then having this new amount will be re-amortized over a new period of time.

This type of an agreement is called a loan modification.

There are many reasons that you may want to look into loan modification - although this is not a process that you will want to consider for just any reason, it is one that offers some benefits if you find yourself in a dicey situation.

For many people, the process of loan modification never comes to mind. But on the other side of things, there are some people who have had to deal with this in order to get their life back on track.

So what are the benefits of loan modification? Here are three that you should keep in mind if you find yourself staring this scenario in the eye.

1. If you have missed mortgage payments in the past, but are now back on track, loan modification can help you to keep things this way. Generally speaking, your lender will allow you to roll your missed payments into a modified loan. For this reason, you will be back on track with the ability to pay the money that you missed out on in the past.
2. Simply put, loan modification can help you to keep your home if you are facing foreclosure. As you can imagine, this is one of the biggest benefits of this process. If you have found yourself with foreclosure closing in, loan modification could help you to escape just in time. This is not always the case, but you should at least look into loan modification if you think that it has the chance to help you out.
3. Although the loan modification process is long and drawn out, if it is something that you need to do, it is not nearly as hard as you may think. You will have a lot of help along the way, and if you are willing to make it work, you will definitely want to consider moving through the many steps with speed and precision.

These are only three of the main benefits of loan modification and as you can imagine, there are many others that you will also come across if you are ever faced with this situation.

But remember, the loan modification process is not all fun and games. It would be much better on you and your home if you never have to consider looking into this process.

Even though there are companies out there that will help you negotiate your loan modification - you may be better off in the long run if you try to do it yourself. And in spite of what you might think - mortgage companies handle loan modification requests every day.

Just contact your mortgage company and explain your situation. You might be surprised at how helpful they can be.

Dealing with pre-foreclosure is not always easy to do.

In fact, dealing with pre-foreclosure is never easy to do no matter who you are. The fact of the matter is that this is something that you never want to talk about if you have a mortgage on your home. If you are talking about pre-foreclosure there is a good chance that you are behind in your payments, and feeling like you are going to have your home repossessed. And as you can imagine, this is a process that is far from fun.

The best way to deal with pre-foreclosure is to avoid it altogether. While this is easier said than done for some people, you should remember that your lender does not want to go through this.

When it comes down to it, foreclosing on a home is a timely and difficult process for a lender. Not to mention the fact that they are probably going to lose money on the deal as well. For this reason, if you touch base with your lender before pre-foreclosure sets in, you may be able to work out a deal that both of you can agree on. Even if you are far behind in your payments, there is a chance that they may set something up to help you get back on track.

If pre-foreclosure has already set in, you need to look into what happens next.

Generally speaking, pre-foreclosure is the step before your home is taken back by your lender. At this point, you still own your home, which means that you can do whatever you want.

For most people, the best option during pre-foreclosure is to look into selling. This way, you can make your back payments to the lender, and hopefully, pay off the remaining balance of your home as well. Just remember, you are only going to be in the pre-foreclosure for so long. You need to do whatever you can to sell during this time, if that is what you decide to do. In many cases, this means that you will have to take a lower price than what your home is actually worth.

Overall, dealing with pre-foreclosure is never fun. This is something that every homeowner would rather not talk about. But if you are faced with this situation, there are ways that you can attempt to make things better.

Are you looking to buy a house and/or get a loan approved in the coming months?

Don’t you hate it when your lender or mortgage broker says they need just one more piece of information?

Here is one of the most complete lists of every document necessary for the approval of a loan. Figure out which one’s you’re responsible for - or give me a call and I’ll let you know which ones you need - and then when the lender calls, you don’t have to scramble to get what he or she needs.

Loan Approval Checklist

• Appraisal
• Credit Report
• W-2’s (2 most recent)
• 1040 Tax Returns for 2 most recent years
• Paystubs for all borrowers for last 30 days
• Profit and Loss statement, YTD and balance sheet from accountant for self-employed borrowers
• Business Tax Returns
• Verification of additional income (child support, Social Security Income (SSI), Pensions, etc.)
• Most recent statements on 401 plan, IRAs, stocks, mutual funds, etc. \
• List of all open accounts with balances (credit, auto payment)
• Bank statements for the last 3 months with ALL of the pages
• Gift letter and copy of gift check (if applicable)
• Name and address of landlord (last 2 years) or mortgage company
• Copy of note
• Copy of deed and trust on property being refinanced
• Copy of leases on rental properties
• Copy of contract on sale of present home
• Ratified sales contract with all addendums
• Copy of earnest money deposit check
• Copies of military orders (if applicable)
• Copy of DD214 (Military Discharge Papers) (if applicable)
• Original Certificate of Eligibility
• Copy of the title to any car, boat or other vehicles less than 3 years and paid in full
• Copy of divorce decree or separation agreement
• Child support documents with 1 year payment history from courthouse (if applicable)
• Paid receipt for any collections, charge-offs, judgments, or liens

As you may or may not know, foreclosures are on the rise - even here in Anne Arundel County.

The main reason for this is that more and more people are buying homes that they cannot ever afford to pay for.

Why are they doing this, you may ask?

One reason is that they are getting caught up in adjustable rate mortgages that seem okay up front, but do a lot of damage when things change. But no matter why you are up against foreclosure, you probably want to know what your options are.

In most cases, if you are faced with foreclosure you are not going to be able to get around this. But this is not always true, so you will definitely want to give it a try. After all, anything that you can do to keep your home would probably sound good to you. In many cases, if you get in touch with your lender early enough they will help you to avoid foreclosure. The problem is that most people usually do not do this. Instead, they wait until they get their foreclosure in order to get worried.

As a general rule of thumb, if you feel that you are going to be up against foreclosure in the near future, you need to get in touch with your lender. In fact, call them the second that you begin to miss payments. This way, they will know that you are not trying to hide. In turn, they will be much more inclined to cut you some slack any maybe even work out a way for you to get back on track.

If foreclosure has yet to set in, but it is coming and your lender is not willing to help, you may want to look into selling your home. This is far from keeping your property, but at the same time it is much better than having it repossessed. When this happens, you are not going to get anything out of your home. You would be much better off selling your property, and then working with your lender in order to get things taken care of.

All in all, if you are facing foreclosure, keeping your home is going to be a difficult task to accomplish. But with that being said, it is far from impossible.

You will want to act desperate and do whatever you can in order to stay in your home. Sometimes this is enough if you have a willing lender, but other times it is not.

As the real estate market continues to turn sour and adjustable rate mortgages continue to climb - more and more people are looking into the loan modification process.

If you think that loan modification may be able to help you get back on track with your mortgage, you will want to get in touch with your lender immediately - in order to get started.

But before you do that, you will definitely want to learn a bit more about what loan modification has to offer. After all, this is not something that you want to do for no reason whatsoever. The loan modification process can be long and drawn out, and unless you absolutely have to do it, you will be much better off staying away from it.

Generally speaking, loan modification is used among homeowners who are attempting to stop foreclosure on their home. Foreclosure is when the homeowner gets behind in their payments, and the bank is going to repossess it. With a loan modification program, a homeowner may be able to stop this by getting the terms of their mortgage changed. If you have the money to make your current payments, but cannot catch up with the ones that you missed, a loan modification is probably the way to go; if your lender will work with you do this, of course.

The way that a loan modification works is not entirely difficult to understand. Simply put, your lender will take your back payments, as well as interest, and roll it into the overall amount of your mortgage. From there, the loan will be re-amortized, and you will have the chance to more or less start over fresh. Just remember, if you go through with the loan modification you should be able to stay up to date with your payments. It is going to be a waste of time for you to do this, and then start missing payments again.

A loan modification can help you to avoid foreclosure, while also getting a fresh start on your mortgage note. Although this process is not something that you want to go through, for most, it is much better than losing their home.

If you find yourself facing foreclosure, do not waste another day. Get in touch with your lender to see if a loan modification program would be possible.

Financial troubles could be in store for thousands of homeowners if the dire foreclosure forecasts come true. But homeowners facing foreclosure do have options, says Judon Fambrough, a lawyer with the Real Estate Center at Texas A&M University.”They can pay off the debt before the foreclosure sale begins, refinance the debt with another lender, or sell the property and pay off the debt,” he said. “However, these options may not be practical for homeowners who lack funds, good credit, or the time necessary to sell the property before foreclosure.”

Fambrough says another, lesser-known option is available. The homeowner can request a deed in lieu of foreclosure (DILF).

A DILF conveys the property back to the lender in exchange for cancelling the debt. The lender’s consent and cooperation are required. DILFs offer several advantages over traditional nonjudicial foreclosures under deeds of trust, the most significant of which is that the homeowner’s credit is unaffected.

In addition, Fambrough says DILFs are quicker, requiring fewer than the minimum 41 days needed to foreclose on a home under a deed of trust. DILFs are also more confidential and less expensive.

“The major costs of a DILF are deed preparation and the recording fee,” Fambrough said. “But lenders may require the debtor to pay for a title search and an appraisal before agreeing to the DILF.”

The title search determines whether there are other liens on the property, and an appraisal substantiates the property value. Often, if a property has more than one lien, or if the property value does not greatly exceed the amount of the debt, lenders will not agree to the DILF.

Under certain circumstances, a lender can void the arrangement or foreclose even after agreeing to a DILF.

“The arrangement could be voided if there was a lien or encumbrance on the property that the homeowner did not disclose or that the lender had no knowledge of,” Fambrough said.

Fambrough points out that, in some cases, homeowners may find foreclosure a more attractive option than a DILF.

“If the property value exceeds the debt, and the debtor decides to foreclose, any excess revenue generated by the foreclosure sale will go to the debtor,” he said. “This is not the case with a DILF. Debtors forfeit their equity.”

Before executing a DILF, Fambrough recommends the homeowner talk to a financial advisor about possible income tax consequences that could result from the debt forgiveness.

When it comes to doing business with a hard money lender there is a lot that you need to be aware of. After all, dealing with one of these lending companies is not the same as a more traditional bank or lender. For this reason, it is quite important that you consider what hard money lenders have to offer. And not only what they have to offer in the form of benefits, but also what you must do in order to meet their requirements. The more that you know about hard money lenders, the better decision you will make when it comes to whether or not you should do business with them.

Why would anybody do business with a hard money lender as opposed to a regular bank? Generally speaking, hard money lenders are for those people who do not have the best credit in the world. In fact, there credit is so bad that they cannot even get a mortgage. If you are in this situation, but still want to buy real estate, a hard money lender may be able to come to your rescue. Since these lenders do not follow the same rules and credit outlines as traditional banks, people with bad credit have a much better chance of securing the loan that they need in order to buy. But with that being said, hard money lenders also have to deal with a high level of default. For this reason, they have to charge high interest rates in order to make enough money in the long run.

The collateral in a hard money lender deal is usually the real estate that is being purchased. Of course, it can also be other assets that the borrower has as well. This is all a matter of preference as well as what each side agrees on. In many cases, a hard money lender will only offer to loan a certain percentage of the overall cost of the real estate. For instance, they may offer the borrower 60 percent as opposed to the whole thing. In many cases, borrowers are forced to put up additional collateral in order to get 100 percent financing. This is something that you definitely need to consider if you are going to take out a loan from a hard money lender.

Overall, you may want to get a loan from a hard money lender if you cannot qualify for one from a more traditional source.

One option to buying a house when you can’t get a mortgage for the full amount is called owner financing (or seller take back).

There are many details to consider if you are going to get involved with owner financing.

Remember, this is not the same as getting a loan from a bank or mortgage lender. If you are going to get involved with owner financing, that is perfectly fine. But with that in mind, you need to make sure that you are aware of the details that surround this type of deal. Remember, when you are not working with a bank or lender, things are going to be a bit different. While this may not bother you, some people feel that owner financing is a bit too risky.

All in all, this is a decision that you will have to make on your own.

The first thing that you must consider is how long you will have to pay your loan when dealing with owner financing. With a traditional 30 year fixed rate mortgage, you more or less know exactly what you are up against. But with owner financing, this may be far from the case. Make sure that the term of you owner financing is detailed in depth so that you do not end up getting the bad end of the deal in the long run.

To go along with the owner financing term, you also need to take a closer look at the interest rate that you are going to pay. Just like a loan that you will get from the bank, you are going to have to pay interest to the owner. Of course, this should be negotiable, but with owner financing you usually have to pay a higher rate. This is common because it goes a long way in protecting the owner of the property.

But speaking of protection, what are you doing to keep yourself safe? When dealing with owner financing, you need to make sure that you know what you are getting yourself into. Is the owner somebody that you can trust? Are you afraid that they are going to leave you hanging? The best way to avoid a skeptical situation is to not get involved at all. But if you are going to, make sure that you take the time to have a perfect contract in place.

As you can see, owner financing is not something that you should jump into without thinking about what you are doing. Take your time when deciding if owner financing would suit your current financial situation.

Contrary to what a lot of people believe, there are some benefits of taking out a second mortgage. This is not to say that you should get a second mortgage just for these benefits, but if you do find yourself in the position of having to do so it will not be all doom and gloom for you. In fact, after you take a look at the benefits of a second mortgage you may feel strongly that you should move forward with the process.

The biggest benefit of a second mortgage is that the amount of money that you receive is based on your home’s equity. This means that you will be able to get the funds immediately. As you can imagine, this is very important to a lot of people. The fact that you can get the money you need right away as opposed to having to wait is very important. All in all, a second mortgage is a secured loan and in most cases it is easier to get than any other type of loan.

Another huge benefit of a second mortgage is that the interest you pay on it is usually tax deductible. Of course, you should not get a second mortgage for this reason, but it is a very good benefit to keep in the back of your mind. This is a benefit of a second mortgage that is not available on most of your other loan options. Basically speaking, it is very easy to deduct the interest that you pay on your second mortgage.

And in some cases it can also be your benefit to get a second mortgage when you purchase a home - you can use the first mortgage to purchase the money at a LTV ratio that will allow you to get away without paying PMI - then use a second to make up the difference.

Finally, a second mortgage may be your only option if you need money now. Many people forget about this benefit because they get so caught up in searching for other kinds of loans that are not going to give them what they want right now. If you need money now and cannot afford to wait, a second mortgage will allow you to do this thanks to the fact that it is based on the equity in your home.

Overall, there are quite a few benefits of a second mortgage. If you are thinking about moving in this direction, you will want to make sure that you are aware of the benefits. They may be all that you need in order to finally make the decision to move forward.