My procrastinating sister tells me that she needs to make a mortgage decision this morning on her new 250,000 home. She can either get a fixed 30 year mortgage for 5.75% plus PMI or she can get a 6.37% mortgage that avoids PMI and somehow lowers her payment $200 per month. Does this make sense and if so, which option would be best? She probably won’t stay in the home more than 5-10 years.
there are better options for her considering she is only staying in the home 10 years max. there are programs that the lenders pay PMI her . tell your sister PMI is temporary once the home gains value that the loan amount is below 78% of the home value it goes away simply put after 2 years or so get an appraisal.
the rate seems slightly high only slightly high though. there are lender paid PMI programs available. tell her to shop a bit this morning and see what else is out there.
check the rates on the site below and a few others to compare the site below you can request a rate and they will tell you. good luck to your sister
The IRS sets a minimum rate that can be charged for a home mortgage. That number has a special name which escapes me. Anybody know?
Thanks
You may be talking about the imputed interest rules.
If you are receiving or making payments for a loan or installment sale, but little or no interest is stated on the contract, the IRS assumes a rate of interest based on the published applicable federal rate. For instance, if you sold some land on an installment sale and agreed to receive the payments over a 10-year period interest free, the IRS would determine that part of your sales price was actually interest and calculate the interest amount based on the applicable federal rate.
There are some loans exempt from the imputed interest rules, (1) the $10,000 gift loan exception and (2) the $100,000 gift loan exception. See irs.gov for details.
Hope this helps.
Will America go through a recession and why after this crisis?
The subprime crisis has led to higher foreclosures and tightening bank lending which hurt all kinds of businesses that borrow money to make purchases and to expand. Many Americans can’t afford or are struggling to pay mortgages and other loans based on the value of their homes which have gone down. As a result they are spending less and since consumer spending represents close to 70% of the U.S. economy, this means we are in or heading toward a recession.
Incidentally, a recession in the classic definition means two consecutive quarters (six months) of economic contraction. This means the Gross Domestic Product or GDP of the U.S. declines versus the same period a year earlier.
The subprime crisis has already led to proposals of new financial regulations but it will be a year or more before the effects and any legislative changes take hold.
I have been a wholesale mortgage underwriter for 5 years; In the consumer finance biz for 10 yrs. I have been laid- off 3 times (2 times in the last year). I’m very fustrated and pretty much done with the industry as a whole. Only thing is that I’m lost! I have no idea what I can do/ want to do for a living. I really cannot go back to school full time because I need a full- time job to make ends meet. I have a college degree (in History, I wish I could do that over again) that I really do not use. So I guess what my question is, has anyone out there been in this situation? If so, what did you do? What process did you use to come to your end result? And my final question… What the heck can somone do with their only experience coming from the consumer finance industry?
Look into the possibility of becoming a Bank Manager. They have steady work, good hours, great working conditions, and terrific benefits. Your salary will depend upon your experience, which, by the sounds of it, you seem to have what it takes to get top dollar in exchange for your time. Consider taking the civil service test for positions of interest. Just visit their website for a lits of current job openings, and the required test for that position. Hope this helps.
Under President Jimmy Carter, the Community Reinvestment Act (CRA) was passed. It required federal financial institutions to encourage banks to give home loans to persons with little credit and low income. Economist Russell Roberts said that the CRA played a major role in creating the sub-prime mortgage crisis in the U.S.
Under Bill Clinton, the CRA was expanded and Clinton set targets for low-income home ownership at the Department of Housing and Urban Development and at Fannie Mae and Freddie Mac. Banks were forced by the federal government to provide bad loans to unqualified people.
Rep. Barney Frank (D-MA) is Chairman of the Financial Services Committee in the House of Representatives. In 2003, he said of Fannie Mae and Freddie Mac: “These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” In the late 1980s and early 90s, Frank was engaged in a sexual relationship with Herb Moses, who was Fannie Mae’s assistant director of product initiatives! Bill O’Reilly exposed Frank’s involvement in the mortgage crisis: YouTube – O ‘Reilly – Barney Frank Had Affair with Fannie Mae Exec. Frank looked the other way, while our economy was being destroyed by federal policies created in Clinton and Carter Administrations. (Freddie Mac and Fannie Mae help fund the homosexual agenda.
In 2008, Freddie gave $20,000 to a Parents and Friends of Lesbians and Gays (PFLAG) event; Fannie Mae gave nearly $19,000 to the same event. Freddie has donated $125,000 and Fannie donated $80,000 to homosexual groups since 2005.)
Senator Christopher Dodd (D-CT) is head of the powerful banking committee in the Senate. He and Barney Frank consistently resisted attempts by the Bush Administration to closely regulate Fannie Mae and Freddie Mac. Dodd also got preferential treatment from Countrywide on two mortgages. Countrywide was one of the biggest subprime providers.
Barney Frank and Christopher Dodd received thousands of dollars in contributions from Fannie Mae and Freddie Mac over the years. Dodd has received $133,900 since 1989; Frank received $40,100. (While in the Senate, Barack Obama received $105,849).
As long ago as 2003, President Bush was trying to get the House and Senate to carefully monitor the actions of Fannie Mae and Freddie Mac. His efforts were rejected by Democrats.
Obama associates headed Fannie Mae and Freddie Mac during the years that the crisis was getting out of control. Obama friend Franklin Raines ran Fannie Mae and collected $50 million from it. Obama friend Jamie Gorelick worked for Fannie Mae and earned $26 million; Jim Johnson, formerly Obama’s vice president search committee chairman, hauled in millions from his work with Fannie Mae as CEO.
ACORN, the socialist group that routinely engages in voter fraud, was involved in pushing for risky loans to people with bad credit histories or little money for down payments. ACORN intimidated banks in Chicago and elsewhere to give risky loans! Obama actually trained ACORN workers when he was a community organizer in Chicago! ACORN used provisions of the Community Reinvestment Act to delay or halt efforts of banks to merge or expand until they had lowered their credit standards!
Well, they didn’t. Someone seems to forget that just like in the Great Depression, this current mess was created by a decade of Republican legislation. And now they are crying like cry babies that it’s Obama fault. Oh my! aren’t they delusional.
I need a lender who can do a 80% first mortgage, and have the seller carryback the 20% second. I am in washington state. Please advise. I have alot of clients that needs this type of financing. Thanks
Plenty of lenders will still allow it. ING for one if you don’t mind your clients being taken by their retail side.
Problem is – where are you going to find someone stupid enough to do the 20% second? The 80% is easy….the investors in those seconds are seeing their bonds worth 15 cents on the dollar.
My now ex-girlfriend let her house go into foreclosure, even though she is sitting on an 80,000 dollar bank account. Could the mortgage lender sue her and win the money she owed them on the home loan?
Yes. The lender foreclosed. They sell the house, if the amount is less then what she owes, the lender will sue for that amount.
If I were to buy a forclosed home for $29,900 and it needed about $10,000 to put it back in good shape, would a lender borrow me the $40,000? I am low income so do not have extra money laying around for the fixing up on a fixer upper.
Well, you could as long as the house’s value is at $40,000 or more. It really does not matter what you pay for the house. The loan is limited by its market value. The bank will not lend you more than what it can get for it in the event that you default.
Do your homework first. Nowadays is not so good to get into fixer uppers, you must be really careful of the major repairs it may need, like roof, electrical, and foundation repairs. These are the most expensive.
Take care.
I have an interest only mortgage with my mortgage lender but I would now like to let my house out.
I have been advised that if I let my house out I am obliged to let my mortgage provider know.
I don’t know what the repercussions of this would be if I did or didn’t tell them. How would they find out if I just let it out anyway? What would they do if they ever found out? If I meet their mortgage repayments they shouldn’t have a problem, should they?
Can anyone enlighten me on these matters?
If your mortgage agreement states that you must notify the lender if you rent your house, then you must do so or you are violating the agreement. If you are in violation, the lender may demand repayment of the debt. If the agreement is silent on the matter, you are free to let your house with no repercussions. Naturally, you still have to satisfy your mortgage payments. Read your mortgage contract to find out what it says about the matter.
I am currently looking into doring a short refinance of my home in the Las Vegas,NV area. I bought the home in January 2008 and the home value has dropped about 100K. I spoke to my lender about different options for the home, since I am moving next year out of state. The lender recommended I do a short refinance since I am not behind on my mortgage payments. Of course I would having an attorney do this for me, since I know banks are uncooperative.
I am wondering if anyone else had gone through this process and what the outcome was? I am not doing a short sale, especially since it still affects my credit like a foreclosure. Thanks!
A short refi is a very good option if you can qualify. NV was one of the hardist hit states for property value decline and if you could get a new loan at or below value, it will save you a lot of money. If you are behind in your payments, an attorney cannot help you with getting qualified. It’s all up to the new lender. On the other hand, if you can secure a new loan at mimimum 80% of the property’s value, you have a shot. You would need to have the new lender send you a pre-qual letter and a preliminary HUD1 statement. You would then contact your lender and mention you have a lender who may be willing to lend you funds and get the process started. I cant speak for all lenders but with mine, we look favorably on short-refi’s. If someone can secure a new loan in today’s enviorment, it helps them and helps us.
Dont think that all banks are shady and not willing to help. As long as the new loan is near market value, they should be willing to consider your offer.