Avoid Home Foreclosure Today

What Is A Strategic Foreclosure?

Editor — Tue, 20 Oct 2009 21:47:27 +0000

Many Americans are going to great lengths to save their homes; from maxing out credit cards to getting a foreclosure attorney. There have even been stories of people blockading their property to prevent eviction. But a small minority of owners are actually walking away from their homes even when they can afford the mortgage.

Strategic Foreclosure

If you bought during the peak of the real estate market, the value of your home may have decreased anywhere from 10 to 40% or more. For many, this is irrelevant, because they plan on being there for the long run. But others bought with the intention of reselling their home for a tidy profit in a few years. Whatever the case, many are choosing to walk away simply because their home is worth so much less than what they paid for it. This is called a strategic mortgage.

Right now only a small percentage of people are doing this. But if prices continue to decline, this may become much more common. In fact, a recent poll recently found that 32% of homeowners say they would walk away if the value of their home continues to decrease. They say it would be better to cut their losses and get an apartment than continuing to pay on an underwater home loan.

Consequences

If you’re contemplating this technique, there are consequences to consider. First of all, a strategic foreclosure impacts your credit in the same way a regular foreclosure does. That means it will stick around on your credit record for at least 7 years.

During that time, it will most likely be more difficult to get credit cards, car loans, or any kind of lending for that matter. According to internet forums and credit card reviews, right now it’s even difficult to obtain something as simple as a department store card if you’ve had a recent foreclosure. And if you’re dreaming of a Visa Black card or some other premium piece of plastic, you can forget it as long as that foreclosure is on your credit file.

Alternatives

As ironic as it sounds, there’s never been a better time to have troubles with your mortgage. With so many new programs, incentives, and regulations to protect homeowners, there’s a good chance you can modify your mortgage.

There are now opportunities to get a historically low APR. Depending on your current rate and the amount you borrowed, this has the potential to save you hundreds of dollars a month.

Rate Reduction:

This may be harder to do, but depending on the price you purchased your home for, you may be able to get the amount of the principal reduced.

Principal Reduction:

Foreclosure Freeze: This varies state by state and the rules are constantly changing, but there are some areas which have put a “freeze” on new foreclosures; postponing them an extra 30 to 90 days. During that time, they want you to try and work out a new payment to keep you in your house.

The bottom line is that help is available and a strategic foreclosure may not be necessary. Consult the internet or an attorney which specializes in this field to find out more.

Finding foreclosure listings and foreclosed properties by city and state can easily be done through sites like GoHoming.com

Post from: Avoid Home Foreclosure Today

What Is A Strategic Foreclosure?

Mortgage Rates

Editor — Mon, 22 Jun 2009 18:07:46 +0000

For those of you out there who don’t have a clue as to what a mortgage is, read on. A mortgage is the transfer of an interest in property a lender as a security for a debt which is usually a loan of money. Mortgage is mainly a security for the loan that the lender makes to the borrower. It is the way by which individuals and businesses can purchase real estate without the need to pay the full value immediately from their own resources.

In the ’50s and right up until the mid ’60s the Mortgage Rates were around 5% to 5.5%, which is very close to where mortgage rates are now. However, beginning in 1971, the mortgage rates started to increase. The economy today is very dependent upon mortgage rates. Right now the interest rates are very low.

Mortgages may be largely classified into two:
1. Fixed Rate Mortgage (FRM) and
2. Adjustable Rate Mortgage (ARM)
The Fixed Rate Mortgage has the characteristic of a constant and stable interest rate throughout the life of the loan. Our parents more than likely had one, as did their parent before them. The major advantage of fixed rate mortgages is that they present predictable housing costs for the life of the loan. The more prominent mortgages rates you will probably hear about are:
• 30-year fixed-rate mortgages
• 15-year fixed-rate mortgages
• ”Convertible” mortgages
This option gives protection to the borrower in the event of fluctuating rates. It is a well-adopted alternative mortgage plan with conventional and concise figures devoid of hidden rate escalations most suited for a typical middle class family. Right from the inception of the loan up to the completion, you will know the fixed amount that will be paid during the entirety of the term.

The Adjustable Rate Mortgage, on the other hand has become one of the most popular and effective tools for helping some home buyers achieve their dreams of owning a house. As it was mainly developed during a time of high interest rates which kept many people out of the housing market, the Adjustable Rate Mortgage offers lower initial rate. It does so by sharing the future risk of higher rates between borrower and lender. They can be an excellent choice of financing under certain conditions, like the high interest rates, and short-term home ownership. Adjustable-rate mortgages differ from the fixed-rate mortgages in that the interest rate and monthly payments and as market interest rates fluctuate.
In recent weeks, mortgage rates have spiked, representing perhaps the most menacing obstacle to the federal government’s efforts to revive the housing market and pull the economy out of its devastating rut. Rates have gone up from 5.03 percent on May 26 to 5.79 percent on June 10, as per the sources. Increased mortgage rates undercut the recovery in a number of ways. They tend to drive housing costs up, thus limiting the buyers demand and threaten to drag the already falling home prices even lower.

But yes, the one thing about recent mortgage rates trends is that they are worth talking about! Back in ‘07, when the mortgage rates were going down towards 6%, everyone said that it couldn’t last much longer. But people have short memories. The recent mortgage rates trends have taken mortgage rates from a historical low to a truly historic low, and there is likely to be another fall or three before the recession bottoms out.

Post from: Avoid Home Foreclosure Today

Mortgage Rates