What Do I Need To Apply For A Mortgage?

If you are buying a home for the first time, you need to get financing. So, what do I need to apply for a mortgage?What Do I Need To Apply For A Mortgage?Research is the first step of the loan application process. Familiarity with budget, the type of desired property, and the type of loan that will work best for you are some of the vital issues you need to figure out first. The key to getting the loan you want is to be prepared.One of the key aspects you will need to review is your credit history. Your credit score can be a make or break factor in the determination of whether to give you financing. On the downside, most credit reports contain erroneous information. In fact, more than forty percent of all credit reports contain at least one error.Once you have completed your preparation, it is time to actually apply for a mortgage. So, what are the hard items you are going to need?1. Pay stubs for the last 30 days.2. Documented proof of any other income such as alimony payments, stock dividends and such.3. Monthly investment statements – 3 months.4. Bank account statements for the last 3 months.5. W-2 Forms covering the past two years. 6. Federal Tax Returns for the last two years.7. Bankruptcy filings, if any.8. Any estimate of proceeds from another home you are selling.9. An optional, but wise, statement should be included explaining where the down payment for the home is coming from. 10. Documents showing ownership and value of any high worth assets. At the end of the day, the documentation is not really that difficult of a hurdle to jump. The key is to know what you need, organize it and provide it to the lender.

Funding the Costs of Your Reverse Mortgage

Many older people are taking advantage of reverse mortgages to help with living expenses. If your house is paid for, this may be a viable option for you. A reverse mortgage means you are taking a monthly draw from the equity in your home. It can mean the difference between being able to stay in your home as you get older, or having to sell it and move someplace else. A great mortgage tip - ask that your closing costs be paid out of your loan proceeds. This means you can secure a reverse mortgage for no out of pocket costs

Mortgage Payment Calculator

The right mortgage has to have the right monthly payment for your particular financial situation. The mortgage payment calculator is a simple way to make sure that you've got a match. It calculates your potential monthly payment by computing parameters related to loan and property information. It also takes into consideration tax and insurance information. Input these numbers and you've got quick estimate of whether or not the loan is in your budgetary ballpark.Our monthly mortgage payment calculator is simple to use. The first step includes four fields for loan amount, interest rate, length and home value. The loan amount is how much you'll need to borrow, the interest rate is the rate advertised by the lender, the length is the amount of time it takes to repay the loan (generally 15 or 30 years) and the home value is the estimated price. The second step of the mortgage payment calculator includes three more fields; annual taxes, annual insurance and annual PMI (Private Mortgage Insurance).When you use the mortgage calculator, the main fields to keep your eye on are the interest rate and the length. If you input a lower rate, you can expect your monthly payment to go down. Just how much an interest rate decrease affects your monthly balance depends on the size of your loan.Choose a loan with a shorter term, and you can expect your monthly payment to rise. Consider that you're paying off the same loan in a shorter period of time.This quick overview is great for comparing lenders. It's the first step to finding a mortgage that matches your budget.Also see the other mortgage loan calculators to perform additional calculations.

Sub-Prime Mortgage Loans

If you have less than stellar credit, you may be a candidate for a sub-prime mortgage loan. So, what exactly are they, how do the work and should you apply for one?Traditionally, the loan industry was fairly static. To get a loan, you needed a history of employment, adequate income and good credit. As the loan industry has matured, it has started developing programs for people that did not fit this profile. For those with credit problems, programs known as sub-prime mortgage loans slowly evolved. Your credit score is determined by applying a calculation to your credit report. A company called Fair Isaac Corporation makes the calculation. The resulting score is known as your “FICO Score”. A score above 713 is considered good credit. One below 600 is considered bad credit. The average score for Americans is 725.Borrowers with a credit score that falls below 620 are candidates for sub-prime loan loans. Sub-prime mortgage loans work more or less the same way as a traditional loan. The primary difference has to do with risk. Because you have poor credit, the lender considers you to be a risky bet when it comes to paying back the loan. This manifests in the loan in a couple of ways.First, you can expect to pay a higher interest rate on the loan. The rate can be anywhere from one to four points higher depending on your specific situation. The reason a lender charges you more is it expects more profit for taking a chance on you. Fortunately, you will be able to deduct your interest payments on your taxes.You can also expect to pay points on the front of the loan. A point equates to one percent of the loan. By charging you points up front, the lender is again trying to limit its risk. In practical terms, it is trying to get as much money up front as possible. When evaluating your sub-prime loan option, points are something you really need to focus on in relation to your budget. As with the interest you pay, points are tax deductible.It is extremely important that you understand that sub-prime loans vary widely. One lender may be offering interest rates terms that are as much as two percent higher than another. If you are considering a sub-prime loan, you are highly encouraged to use a loan broker to shop through the various loan programs being offered. Saving even one percent on your interest rate can save you $50,000 or more on the loan.

Types of Mortgage loans

In the past, homebuyers more or less had limited mortgage loan options. These days, there are more options than you can shake a stick at, but here’s a primer on the basics.Types of Mortgage LoansWith the real estate market explosion over the last 10 years, a call has gone out for unique mortgage loan programs. Bankers have been more than happy to answer the call. For many borrowers, traditional mortgage loans still fit the bill. Here’s an introduction.1. Conforming Loans – The loans comply with requirements set down by Fannie Mae and Freddie Mac, two government sponsored entities that buy and sell loans from mortgage lenders. These entities put strict caps on the loans they will buy, with single-family homes having a mortgage cap in the range of $360,000. With the booming real estate market, many areas such as San Diego do not come close to fitting into the conforming loan market since homes average in the $600,000 range.2. Non-Conforming Loans – Known as “Jumbo Loans”, these mortgages are written for loans that exceed the $360,000 cap mentioned previously. They tend to have slightly higher interest rates, but are readily available.3. Bad Credit Loans – In the mortgage industry, mortgage brokers often refer to a borrower’s “paper.” This paper refers to people with less than stellar credit. “B” paper refers to relatively small problems, while “D” paper refers to bigger issues such as bankruptcy filings. The worse your paper, the more you can expect to pay in interest, points and down payment amounts. You need to carefully determine whether paying these extra penalties makes financial sense.Interest RatesWith each of the above loans, you’ll have an option of going with a fixed interest rate or an adjustable rate. Fixed interest rates simply set a definitive interest rate that will be charged over the length of the loan. Adjustable rates typically start at a figure lower than fixed rates, but can be moved up to reflect changes in the cost of borrowing money. In many ways, you are betting whether interest rates will increase in the future.For a great majority of people, basic mortgage loan options still suffice when it comes to borrowing money. Don’t fret if you have problems qualifying for these loans. There are many other options on the market these days.

Should you overpay your mortgage installments?

There's a simple rule when it comes to debts. Unless the debt is interest free, continuing to borrow the money is costing you money. If you can earn interest on savings or get a return on other investments, it usually benefits you to pay off the debts and invest your money. Except, if you are overpaying to reduce your debts this can leave you short if there should be an emergency and some lenders dislike people repaying more quickly than they should and charge fees and impose penalties for early repayment. So, applying the general rule, you should always pay off the most expensive loans first. That means those store cards, credit cards and high interest loans you are carrying. Under normal circumstances, mortgage interest tends to be less than commercial loans. So, for these purposes, let's assume you have few credit card debts and some savings. What are your options? One is to use the savings to reduce your mortgage debt. This immediately reduces the interest you pay and it will help if you are thinking about refinancing. Property values have been falling fast. In fact, at the time of writing in May 2009, the market has probably not yet bottomed out. That means your loan to value ratio has been falling. Even though you might have had a mortgage for years, you may now find the current balance of the loan is worth more than 90% of the resale value of the property. This will make finding new finance difficult. Even when the ratio is between 80 and 90%, the interest rate is likely to be quite high to reflect the risk of further falls in property values. If you have a capital sum that will lower the amount borrowed, this will make the chances of refinancing at a cheaper rate possible. However, before you pay, make sure you know when the mortgage interest is calculated. You need to ensure you make the capital repayment at a time when you will get the maximum reduction in interest. Also check to see whether there are penalties if you make an early repayment of part of the principal. The other factor is practicality. Once you pay a lump sum into the mortgage, that money is locked up. If there's an emergency of some sort, that forces you to borrow all money needed at higher rates of interest. With the current recession in full flow, unemployment is rising fast. It can be worth having some capital set aside to live on should you lose your job or fall ill. In particular, you should have enough to cover your mortgage repayments for six months should your income dry up. So you can save on your mortgage by overpaying installments or paying a lump sum, but it's not for everyone. Sit down and do the math to see whether it's really for you. But, if you are looking at mortgage refinancing, having a lump sum to hand makes a very good bargaining chip in both getting a new deal and getting that deal at a low interest rate.

Understanding the Mortgage Loan Market

The mortgage business is a complicated and ever-changing industry. It is important that you understand how the mortgage market works and how the lenders make their profit. In doing so, you will gain an appreciation of loan programs and why certain loans are offered by certain lenders.INSTITUTIONAL LENDERSThe first broad category of distinction is institutional versus private. Institutional lenders include commercial banks, savings and loans, credit unions, mortgage banking companies, pension funds, and insurance companies. These lenders generally make loans based on the income and credit of the borrower, and they generally follow standard lending guidelines. Private lenders are individuals or small companies that do not have insured depositors and are generally not regulated by the federal government.PRIMARY VERSUS SECONDARY MARKETFirst, these markets should not be confused with first and second mortgages. Primary mortgage lenders deal directly with the public. They “originate” loans, that is, they lend money directly to the borrower. Often referred to as the “retail” side of the business, lenders make a profit from loan processing fees, not the interest paid on the loan.Primary mortgage lenders generally lend money to consumers, then sell the mortgage notes (in large packages, not one at a time) to investors on the secondary mortgage market to replenish their cash reserves.The largest buyers on the secondary market are the Federal National Mortgage Association (FNMA or “Fannie Mae”), the Government National Mortgage Association (GNMA or “Ginnie Mae”) and the Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”). Private financial institutions such as banks, life insurance companies, private investors, and thrift associations also buy notes.MORTGAGE BROKERS VERSUS MORTGAGE BANKERSMany consumers assume that “mortgage companies” are banks that lend their own money. In fact, a company that you deal with may be either a mortgage banker or a mortgage broker.A mortgage banker is a direct lender; it lends you its own money, although it often sells the loan to the secondary market. Mortgage bankers (also known as “direct lenders”) sometimes retain servicing rights as well.A mortgage broker is a middleman; he does the loan shopping and analysis for the borrower and puts the lender and borrower together. Many of the lenders through which the broker finds loans do not deal directly with the public (hence the expression, “wholesale lender”).CONVENTIONAL VS. NON-CONVENTIONAL“Conventional” financing, by definition, is not insured or guaranteed by the federal government. Conventional loans are generally broken into two categories: “conforming” and “non-conforming.” A conforming loan is one that conforms or adheres to strict Fannie Mae/Freddie Mac loan underwriting guidelines.Conforming loans are a low risk to the lender, so they offer the lowest interest rates. Conforming loans also have the strictest underwriting guidelines.Conforming loans have three basic requirements:1. Borrower Must Have a Minimum of Debt: Lenders look at the ratio of your monthly debt to income. Your regular monthly expenses (including mortgage payments, property taxes, insurance) should total no more than 25 to 28% of gross monthly income (called “front end ratio”). Furthermore, your monthly expenses, plus other long-term debt payments (e.g., student loan, automobile, alimony, child support) should total no more than 36% of your gross monthly income (called “back end ratio”). These ratios can sometimes be increased if the borrower has excellent credit or puts more money down.2. Good Credit Rating: You must be current on payments. Lenders will also require a certain minimum credit score called a “FICO” (http://www.myfico.com).3. Funds to Close: You must have the requisite down payment (generally 20% of the purchase price, although lenders often bend this rule), proof of where it came from, and a few months of cash reserves in the bank.NON-CONFORMING LOANSNon-conforming loans have no set guidelines and vary widely from lender to lender. In fact, lenders often change their own non-conforming guidelines from month to month.Non-conforming loans are also known as “sub-prime” loans, because the target customer (borrower) has credit and/or income verification that is less-than-perfect. The sub-prime loans are often rated according to the creditworthiness of the borrower – “A,” “B”, “C” and “D.”The sub-prime loan business has grown enormously over the past ten years, particularly in the refinance business and with investor loans. Every lender has its own criteria for sub-prime loans, so it is impossible to list every loan program available on the market. Suffice it to say, the guidelines for sub-prime loans are much more lax than they are for conforming loans.

The Pros and Cons of Home Equity Loans

With the refinance craze that has swept the country for the past few years many people have gotten caught up in the hype surrounding these types of loans. But before anyone decides on getting a home equity loan it is a good idea to look at the pros and cons of doing so. Getting a home equity loan is a serious financial decision and as such needs to be thoroughly researched so that you, the borrower, know the ramifications. Probably the first thing that you need to be aware of is that a home equity loan is in essence a second mortgage on your home, and as such carries all the terms and conditions of a first mortgage. On the pro side there is a definite upside to getting a home equity loan. The obvious thing is that you will get a large infusion of cash that you can use for just about anything you want. Once you have signed the papers you will probably receive your check after the closing of the loan is completed. Once the check is in your hand you can use that extra cash for remodeling your house, buying a new car, paying off credit card debts or even invest it and try to make more money. You will also be able to deduct the first one-hundred-thousand dollars of interest on your income tax returns, which can be a large tax savings for you. You will also have to weigh the disadvantages to getting a home equity loan as well. You must be certain that you can make those monthly payments, in addition to the payments on your first mortgage. Having two house payments a month can be a strain on many people's finances, particularly if you or your spouse were to lose your job. You also need to make sure that the market for housing in your area is stable. A sudden housing market drop and even selling your home may not produce enough cash to pay off both of your mortgages. Many people use a home equity loan to pay off other debts, hoping that consolidating many payments into one will make their financial situation better. While this may look good in the short term you need to weigh the benefits against the long term interest you would pay on a home equity loan. Sometimes it may make better financial sense to simply pay off your other debts without the added risk of using your home for collateral. The pros and cons of a home equity loan are many and it is important that you look at both sides of the equation carefully. Don't be blinded by the large amount of money and what you could do with it. Realize that you are putting your home up as collateral and if for some reason your financial situation takes a turn for the worse your home could be taken away from you. Weigh the pros and cons of a home equity loan carefully before you make your final decision.

Reverse Mortgages

To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older. Thus it is usually retired people who consider getting reverse mortgages.A reverse mortgage is a loan against your home that you need not pay, for the time that you are living there. Only when the home has been sold or you cease to live there, does the balance of the loan become payable. No matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home.Reverse mortgages can convert home equity to cashWith a reverse mortgage, the home owner can convert the value of the home that is the full or part ownership they have in their home into cash as a lump sum amount or as regular monthly cash advances. The cash you get from a reverse mortgage can also be paid as a "creditline" account that lets you decide when and how much of your available cash is paid to you.To make sure that a reverse mortgage does not become a debt, the outstanding balance of the loan will at all times remain lesser than the value of the home. In the event that the balance of the loan has gone beyond the value of the home, the homeowner will not be forced to move out or sell his home. At the same time, the lender continues to remain insured.Qualify for a reverse mortgageTo qualify for a reverse mortgage as mentioned above, the borrower must be at least 62 years of age and should have little or no outstanding mortgage balances. The equity available is based on the homeowner age and the value of the home.Reverse mortgage ratesJust like in the case of regular mortgages, reverse mortgages are also subject to fixed or adjustable interest rates and also carry the similar payment of various closing fees. However, unlike the standard mortgages, in the case of a reverse mortgage, the lender, a bank or traditional mortgage lender may provide for the financing of any applicable fees.

Choosing a Mortgage Term

The term of your mortgage is an important factor to consider when choosing your mortgage program. Obviously, the longer the term, the lower the payments - but low payments aren't on every person's mind. In fact, some people prefer to make larger payments towards their home loan because it will be paid off more quickly and because they are putting their money into an appreciating asset. Additionally, if you plan to rent or lease your property or a unit in your property, you'll make more money the faster you pay down your mortgage. The moral of the story is that larger payments are better as long as you can afford them. This doesn't mean you can't get a 30 year fixed mortgage and just be disciplined enough to make an extra payment or two throughout the year, but it does mean that the more money you put into your home, the better off you'll be.

Mortgages – 3 Important Factors

When buying a home for the first time, a mortgage can seem like a daunting thing that you don't understand. Here is some basic mortgage terminology that you need to know in order to make an informed decision.Term - A mortgage term is the length of time you have to pay off your loan. It could be anywhere from 10 years to 30 years. Like any loan, the longer you have to pay off your mortgage, the lower the payments will be. An important mortgage tip - in some cases, the shorter the term, the lower the interest rate.Rate - The "rate" is the interest rate, which basically defines how much you will be paying the bank to borrow money from them. The interest rate offered to you is dependent on your credit rating, how much money you are able to put down, how much money you make and the value of the home you're buying. Rates can also change depending on the loan program.Cost - Costs typically refer to closing costs, which are a part of every mortgage. You may see offers for "No Closing Costs" but these programs are rare. If you get a no closing cost loan, it usually means the mortgage company is making a large enough commission on your loan to cover the closing costs for you. Closing costs usually include an appraisal, recording fees on documents at the registry or deeds, attorney or notary fees and the like. Watch carefully for junk fees!

No Doc – 2nd Mortgage

The No Doc mortgage has become a very popular loan in the finance market these days. While they are popular as first mortgage options, what about No Doc 2nd mortgage programs?No Doc – 2nd MortgageFor years, the mortgage industry was fairly static. You had fixed loans and adjustable rate mortgages. The term was the typical 30 years to pay back the loan, although shorter periods were occasionally offered. If you did not fit within in the guidelines and restrictions of these loan packages, you were out of luck.As our economy has changed, the mortgage market has also been forced to evolve. Why? Well, the days of people working for an employer for 30 years are simply gone. A vast majority of people now work for themselves, on commission and so on. In the mortgage world, this has caused problems. Why? It is difficult for lenders to analyze how much income the potential borrower is bringing in each month. They used to use tax returns, but the information is difficult to interpret given paper deduction such as depreciation that don’t really come out of the borrower’s pocket each month.The No Doc mortgage is a relatively new loan option designed to deal with this situation. The basic idea is to simplify the borrowing process by requiring the borrower to submit minimal or no documentation to support their loan application. The loans are based almost purely on your credit report, the property you want to buy and your stated income. They are often referred to as “liar loans,” since there is little written proof of anything.No Doc 2nd mortgages are an even newer option being made available to borrowers. A 2nd mortgage is simply a loan in addition to your original loan. It is often used as a way to pull cash out of the equity you have in the property. It can also be used to establish a home equity credit line that can be tapped as needed.The No Doc 2nd mortgage works the same way as a no doc first mortgage, at least in theory. Lenders have a habit of calling things “no doc” when they really are not. Specifically, lenders have a habit of wanting to see at least some documentation, particularly with second mortgages. This can include things like the current mortgage obligation on the original loan, pmi payments and even income statements and profit and loss for businesses owned by self-employed borrowers.If you are looking for a No Doc 2nd mortgage, it is in your best interest to shop lenders. The rates offered vary wildly, which means you can easily overpay. Contact us now to get the benefit of our nationwide lender resources to find the best No Doc 2nd mortgage for your situation.

Mortgage Acceleration Made Easy

Wouldn't it be great to be debt-free? The American dream of homeownership has traditionally come with a 30-year mortgage. Add to that credit cards, car loans, college tuition, and the average consumer is drowning in debt. Over the last few decades this has become our way of life, buy now, pay later.

But with the dramatic meltdown of our financial industries over the last few years, people have begun to make a paradigm shift toward reducing debt rather than getting in deeper. Since the mortgage is typically the largest and longest-term debt people have, it is an appealing target to eliminate. The big question is, what is the best way to do that?

Logic will dictate that in order to pay off a loan faster, you either have to make additional payments, or pay more than required for each payment. So in order to make this work you have to have some discretionary income. We need to start realizing that if we pay off our debts faster, we not only save a lot of money in interest; we save more money than we pay in.

For example, if I send in an additional $5000 with my first payment on my 6% $200,000 30-year mortgage, that will save me $28,304 in interest. When I take out my $5000 payment, my net savings will be $23,304. It also shortens my 30-year mortgage by 22 months. I can continue doing this over and over, as I do the time and money savings compound.

But will I have the discipline to do that when the great deal on a new 60" HDTV comes along? And does it make sense to put all my discretionary income toward my debt, even if I have the self-control?

This is where a good mortgage acceleration program comes in. By utilizing financial concepts that have been used by Fortune 500 companies, you can dramatically reduce the amount of interest you pay, as well as the time needed to pay off your debts. With this strategy you don't have to make large changes to your spending habits; you merely change the way you do your banking. Homeowners can pay off their mortgage in only 6-15 years, and save tens of thousands of dollars in interest. And you don't have to stop there; you can include any other debts you have in the program.

You can factor in building up an emergency cash fund of three to six months income -- something that financial planners universally suggest. And yes, if you just have to have that 60" HDTV you can even include that in the program! Yet doing so will show you the ramifications of that choice in terms of how much longer it will take you to get out of debt. And possibly when you see the difference, you may decide that your old 42" is perfectly fine.

Obviously the more things you want to do, the more discretionary income you will need or the longer it will take. But using this program allows you to test different scenarios and see the results for yourself! The program contains an algorithm that systematically creates the highest interest savings possible in the least amount of time. Each individual, due to the uniqueness of their situation, requires a custom plan to achieve optimal results. Plus, if you make additional payments on a conventional 30-year fixed-rate loan, you can't borrow that money without taking out a home-equity line of credit or a home-equity loan. With the mortgage accelerator program, you already have the line of credit in place. That gives homeowners confidence that they can be aggressive in paying their mortgages and still have money readily available if a financial emergency comes up.

Using the example of the 6%, $200,000 30-year mortgage, you could save over $160,000 in interest charges by using a mortgage acceleration program. This is what I call preventing an unintentional wealth transfer, where you transfer your wealth to the bank. Imagine what a difference you could make by investing that $160,000 into to your retirement plan rather than giving it to the bank!

How to Choose the Best Deal with Home Loan Mortgage Refinance

Home Loan Mortgage Refinance refers to replacing the existing mortgage with the new one when required. Many circumstances lead the people to do so. Refinancing your mortgage gets you number of benefits but to get these benefits, it requires you to choose the best deal. If you choose wrong lender and fail to get the appropriate deal, you may have to incur loses in spite of enjoying benefits.

The most important thing to be taken care while availing Home Loan Mortgage Refinance is the cost of the loan. Lenders impose a number of charges in the name of processing fee like, Lender fee or funding fee, Attorney fee, Appraisal fee, Credit report fee, Document preparation and recording fee, Origination or underwriting fee etc.

With this you should also consider the interest rate offered by the lender, compare the interest rates offered by different lenders and processing fees. A cut throat competition in market lets you get the refinance loan at reasonable price. You should also check whether the interest offered by the lender is fixed or adjustable.You should also check the closing fee of the loan. Sometimes it happens that you get enough money any how so that you repay your complete loan at once, then it requires closing fee to be paid to the lender. If the closing fee is high then, either you will have to go with burden of loan otherwise, you will have to pay a big amount for this which would lead you to save nothing. Therefore, this condition should be taken care in advance. Closing fee includes- Flood determination, State and local taxes, Surveys and home inspection fees, prepaid private mortgage insurance or PMI, Prepaid amounts towards interest, hazard insurance, taxes, etc.

After comparing the quotes and finding the best lender you need, you can also negotiate with lender. Write all the fees together and negotiate with lender. This way you can find the best of best deals. Your ultimate aim towards finding the best deal with Home Loan Mortgage Refinance is to save as much money as you can. Home Loan Mortgage Refinance gets you rid from a lot of financial troubles you are facing.

For Owners of Second Homes: Dealing with Your Mortgage

In the 1996 film The Rock, character Stanley Goodspeed finds himself stuck on Alcatraz Island with an ex-con, a team of irrational Marines, and a supply of deadly gas warheads. Stanley doesn't have a lot of options for survival. If you have a bad mortgage on your second home, you might know exactly how Stanley feels.

Since the mortgage crisis began a few years ago, the U.S. government, the FDIC, and big mortgage lenders have rolled out various programs to help homeowners survive these turbulent times. Unfortunately, the vast majority of these initiatives are geared toward the ownership of primary residences. In other words, owners of second homes need not apply.

The rationale for excluding second homeowners is reasonable. Rule-bending legislation is not intended to help people keep assets they can't afford; it's supposed to keep people from becoming homeless. That's no comfort when you're facing a foreclosure on your second home.

What are your options? Like it or not, you may only have four: get a mortgage refinance, sell the property, declare bankruptcy, or let the lender foreclose.

Refinance second home

Mortgage rates are low right now, which makes it a great time to engage in the refinance second home process. This can be more expensive and more difficult to obtain than a first mortgagerefinance. But if you can get the deal done, you'll keep your credit and your investment intact. Your biggest challenge will be the home's value. If it has fallen substantially, a mortgage refinance may be impossible, unless you can borrow enough money from another source to pay down the mortgage debt.

Cool market for property sales

Selling is problematic because the deal may not happen quickly enough or for the right price. Explore outside-the-box alternatives, such as offering a lease-to-own deal, or giving special incentives to speed up the sale. If those aren't workable, talk to your tax advisor about the implications of a short sale. In this process, the lender takes the proceeds from the sale of the home and writes off the remaining debt. The forgiven debt on a second home mortgage could be considered taxable income, though. Once you know what that impact might be, approach your lender with the short sale idea.

Bankruptcy hurts

Bankruptcy court judges have the authority to modify second home mortgages. This is a last resort option, though, because you can't predict how the court will address your particular situation.

Let the chips fall

If the rest of your finances are in good health, and you have no workable options for the second home, ask your lender about a deed-in-lieu of foreclosure. This strategy at least allows you to move on from the situation relatively quickly. It's not an ideal solution, but it's better than being stuck on the foreclosure island, waiting for your eviction notice.

Mortgages and Obama's First 100 Days

As President Obama passed the 100-day mark, many Americans were critiquing his performance. Much of the attention is on mortgages and their relationship to economic stimulus, and the potential for a sustained economic recovery in the housing market.

Loan modification lessens impact of crisis

One of President Obama's biggest initiatives-the $75 billion Making Home Affordable Program-targets loan modification, and that has a direct correlation to the real estate crisis. His administration believes that about four million homeowners can be saved from foreclosure through the Making Home Affordable loan modification plan. The apparent weakness in the Making Home Affordable approach is that participation is voluntary for banks and other mortgage lenders. Many banks are reluctant to offer a mortgage refinance that cuts into their profit margins. They also run the risk of being sued by third party investors if they agree to loan modification plans that cost investors money. But for any loan modification program to be effective in stimulating the economic recovery, somebody has to incur substantial losses. The Bush administration tried a hands-off approach that called for voluntary measures, and failed miserably. It's too soon to tell whether the new president's Making Home Affordable program will succeed, but without stronger incentives for banks, it may turn out to be another paper tiger.

Mortgage refinance preferable choice

President Obama has taken a hard line regarding overall regulation of the financial industry, and that has inspired many lenders to be more proactive and cooperative. He has visibly cracked down on predatory credit card practices, for example, and the mortgage industry has taken note of that. Lenders would much rather offer voluntary compliance than face mandatory rules and involuntary oversight. As a result, banks that would otherwise be reluctant to do so are agreeing to loan modification and mortgage refinance strategies to help homeowners avoid foreclosure. The policing of the financial industry, in other words, creates a special kind of motivation among bankers, and Obama has a team of tough cops and watchdogs working under him.

Affordable mortgage rates

Mortgage interest rates are also the lowest that they've been in nearly 40 years, thanks in part to a Treasury Department initiative to buy about $1.75 trillion in mortgage-backed securities. That makes it easier to do a mortgage refinance and save money or avoid foreclosure, so affordable mortgage rates are a plus for Obama's report card.

But the long-range implications of costly taxpayer-funded interventions remain to be seen. If government investments lead to economic recovery, Obama will get the credit. But a prolonged economic crisis will undermine his performance score. The fact is that 100 days isn't enough time to grade a president, or to hope for legitimate signs of an economic recovery.

What is Mortgage ?

A mortgage is the transfer of an interest in property (or the equivalent in law - a charge) to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower.

This comes from the Old French "dead pledge," apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure.

In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than on other property (such as ships) and in some jurisdictions only land may be mortgaged. A mortgage is the standard method by which individuals and businesses can purchase real estate without the need to pay the full value immediately from their own resources. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.

The cost to the borrower is measured by the annual percentage rate (APR), which is an effective annual rate of interest and fees paid by the borrower.

In many countries, though not all (Iran) or (Bali, Indonesia is one exception), it is normal for home purchases to be funded by a mortgage. Few individuals have enough savings or liquid funds to enable them to purchase property outright. In countries where the demand for home ownership is highest, strong domestic markets have developed, notably in Ireland, Spain, the United Kingdom, Australia and the United States.