Copyright (c) 2009 Walt Vieira

Consumers should be aware of the Loan Sharks lurking in the waters. Now more than ever consumers need to make sure they are dealing with the right mortgage company and loan officer. Mortgage Fraud is not going away any time soon. According to the FBI Mortgage Fraud is escalating and there seems to be a correlation between fraud and distressed real estate markets, the number one state being California.

According to in a release by the FBI,”Industry personnel will feel pressure to find alternative methods to match the income they enjoyed during the real estate boom years. Many will be willing to conduct criminal activities to achieve this goal…”

This shouldn’t come as a surprise. Many loan officers and mortgage companies were living the high life the last few years with easy credit guidelines. Now it’s all changed except for their appetite for money. In order for mortgage companies to maintain the same life style they must work harder and there are plenty that don’t want to do this so they will either leave the industry or try to take advantage of unsuspecting consumers.

The mortgage companies still have the upper hand and this will continue until consumers understand the mortgage process. For most consumers the mortgage process is trial and error. They rely on family and friends to guide them throught the process and then hope and pray they weren’t taken advantage of.

Here are 7 mortgage traps consumers must avoid when shopping for the purchase of their home, refinancing their mortgage or looking for the lowest mortgage rate.

Avoid These 7 Mortgage Traps

*The No. 1 question consumers should be asking — before they choose a mortgage company.

This is something most consumers are unaware of that will cost them thousands of dollars if aren’t careful. Here’s the question to ask a loan officer: How do you track your mortgage rates?. Now simple, right? The loan officer should respond with something like this: “I subscribe to a service that alerts me about an hour before rates will be going up or down, this allows me enought time to talk to you about locking in your interest rate and saving you a lot of money”. If the loan officer doesn’t subscribe to a service then don’t use them…period. Inexperienced loan officers don’t subscribe to a service and are not proactive in tracking fluctuations in the market.

*Whether you should follow your realtor’s advice regarding home financing.

Most realtors will have a few companies they refer business to. They want to make sure that whomever the buyer chooses to do their loan is going to get the deal done. Is the realtor concerned with the buyers rate and costs? Maybe, but probably not. They will leave that discussion up to the buyer and the loan officer. Always talk to a mortgage company of your choice as well. A lot of consumers may not question the rate or costs of the lender. Like my dad always said, “Trust teh advice but always verify”. The same is true with a referral from a realtor.

*Paying for a Loan Modification Upfront

This is a big one. Never pay a loan modification company up front. I advise consumers not to use them period. The reason is simple. Consumers can call their lender directly and ask them about a loan modification program. Their lender will send them the documentation needed via mail. The consumer just needs to follow through with what is required. Would you rather pay someone an upfront fee of $1,000 to $4,000 not knowing if the loan modification will go through or call your lender and go through the proces yourself and keep your money in your pocket. Just because you apply for a loan modification doesn’t mean you will get it. So why pay a company up front for something that isn’t guaranteed? You might as well go to Las Vegas, at least you’ll have a little fun during the process.

*The Take Away

People want what they can’t have. When it comes to mortgages consumers may run into a loan officer or mortgage company that will review their information and then bring up any possible issue such as an old account that was delinquent, or debt ratio issues. Now the loan officer may know that these “issues” are not anything that is going to make a difference on their loan. The loan officer may actually go out of their way to make a big deal about it with the borrower and even tell them they don’t think they can get their loan approved. The loan officer may act like they are going to do their best to talk to the underwriter about it and see if any exceptions can be made knowing all along there really isn’t an issue. Then later that day or the next day after the borrower has been thinking it may not happen, the loan officer comes in on their white horse and says..”We did it! You’re approved but the rate is going to be a little higher and so are your closing costs” The borrower is relieved and accepts the higher rate and costs. The loan officer’s wallet just got heavier.

*The Bait and Switch

This is found in many other industries. The bait and switch happens every day all across the country. The loan officer will promise the lowest rate and lowest closing costs on a home purchase or refinance. They may even disclose a low rate. Then either half way through the process or at the time of signing the closing documents the borrower is informed the rate and costs have changed. This is where the loan officer will put their sales hat on and get to work explaining why they can’t deliver. The mortgage company is hoping the consumer will just raise their hands in disgust and sign away.

*Bad Credit Repair Company Scams *The Low Rate Advertisement scams

This is similar to the bait and switch. Consumers are drawn in by the low rate “teaser” of say 4.25%. This is done to get the mortgage companies phone to ring. The idea is for the mortgage company to take as many application as possible. Kind of like throwing a bunch of wet paper towels against a wall and seeing what sticks. Becareful with these companies.

In the end the consumer should protect the number one investment they will make in their life time…their home. The can protect it by being more educated.

Interest rates for refinancing home mortgages have been on the decline for many months and some banking professionals speculate the rates could be approaching an all-time low. Homeowners who initially financed their mortgage with an adjustable-rate (ARM) loan or a higher rate of interest than currently available may find that now is the time to seek refinancing. Below we look at ways of securing the best home refinance interest rates.

The best way to go about seeking a better interest rate is to go to your local banker for a heart -to-heart discussion. Even if the refinance doesn’t come from that particular bank; it’s always best to sit down in person and make inquiries about how interest rates work and what is currently available based on the homeowners credit rating and equity. Borrowers shouldn’t be afraid to ask questions about how the process works and how mortgage rates are determined.

Homeowners should always be wary of outrageous offers or high-pressure sales tactics from potential mortgage refinance companies. The best way for consumers to arm themselves to deal with offers that could lead to big trouble is to do extensive research on current laws, financing trends, and where to find a reputable lender. Unfortunately there are many shady businesses who make money from uninformed consumers.

Taking the time to do the necessary research will leave those seeking to refinance their mortgage at a better interest rate in a position to spot deals that are risky. More importantly, they will be equipped to find a solid lender that can truly make a difference in future interest and payments.

If done properly, home loan refinance is a very good idea. It can help you to shorten the length of your loan or to lower your interest rate, thus saving you money. To refinance successfully, the lender should be totally aware of the features, advantages and disadvantages this financial procedure has to offer. It is not rare to hear of people refinancing their home loans only to end up paying more than they were paying before. Uninformed decisions lead to bad decisions. Here are some things you should take into account before deciding to refinance your mortgage loan.

To Pay Points Or Not To Pay Points? That Is The Question

 Points are paid upfront and they represent one percentage point of the overall loan principal. If points are paid, the interest rate is lowered. One thing to take into consideration before deciding to pay any points of the new loan is the amount of time you will be residing in the property. If you will be staying for a short period of time, it will not be advisable to pay any points at all. The situation changes if you intend to keep the property for 15 to 20 years, in which case paying points would pay off in the long run. Many people are not aware of the fact that if you pay points on the new mortgage loan, you will be able to deduct the money amount from that year’s tax income return.

Going For A Long-Term Or A Short-term Mortgage?

Both types have their own advantages and disadvantages. If you decide on a short-term mortgage, you will be paying lower interest rates. You should bear in mind that the payments associated with this loan type are substantially higher compared to a long-term mortgage loan. If you opt for a long-term loan, then the interest rate will be higher, but your monthly payments will be more affordable. This will be a good choice if your job is unstable or your income is low.

Fixed-Rate Or Adjustable-Rate Mortgage: Which One To Choose?

This is one of the most important decisions related to mortgage refinancing, the amount of your future payments depend on it. Choosing which interest rate to go for should be based on how much time you are planning on staying in the property. Adjustable-rate mortgages are appropriate in case you are thinking of keeping the property from five to ten years, the initial rates are lower, but you take the risk of them rising steeply together with your monthly payments. Fixed-rate mortgages, on the other hand, offer somewhat higher interest rates, but they also offer peace of mind, which is priceless for many home-owners. The monthly payment is steady, no risks are taken, no ugly surprises are received.

Should You Lock-In The Interest Rate?

Locking in a rate is a safe move as it aims for extreme stability, this would be advisable if rates were on the rise or if you are on a tight budget and cannot afford to roll with the interest rate changes. The best thing to do is to discuss this particular issue with your lender and your accountant and listen to what they have to say.

As you will soon discover when you study current mortgage interest rates these are changing even slightly on a daily basis at present. In some cases several changes to the rates can occur in one day alone. So if you are looking to refinance then comparing them carefully and regularly will help to ensure that you get the best rate possible on the loan you are after.

Plus there are certain things one must consider as you do spend time comparing the current mortgage interest rates. Below we look at a number of these which could prove useful in helping you to get the best rate possible on your loan.

1. Provide The Lender With A Copy Of Your Credit Report – By having a copy of this available and ready to provide to a potential lender then they will provide you with a more accurate loan rate figure. So you are in a better position to quickly determine which of the rates you are considering is actually the one that will prove most beneficial to you as it will ensure that repayments you make each month are the lowest.

2. Confirm What Fees You Will Be Required To Pay – Generally when it comes to refinancing using the current mortgage rates most lenders are happy to provide details of the fees that you will be required to pay. If you are looking at loans where the lender is unwilling to provide such information then look to other lenders for what you need. If you are not careful you may find that the fees they charge are ones that will take you over what you can realistically afford.

In the mortgage business we often hear folks saying things like, “the interest rates are still going to come down.” At this point all economic indicators point to rising long term mortgage interest rates. In California mortgage rates are climbing. If you qualify for a mortgage refinance and you have been waiting for lower rates you may want to consider refinancing now. As the unemployment figures stabilize and inflation occurs the FED will likely raise the interest rate they charge banks to lend money. This will have an immediate and more dramatic rate increase than we have seen recently.

It is impossible to determine when mortgage rates are at their lowest until it is too late. Some people lock rates when the rate is falling and some people lock rates when the bottom of the market is clearly identified and rates begin to rise. Very few people lock rates when the market is at it’s absolute lowest, so don’t feel left out. Currently we are past the bottom of the market and mortgage rates are beginning to rise. Rates are still very low and if it makes sense now may be the time to lock in your refinance rate.

When refinancing you have the choice of working with a bank or a mortgage broker. Some people like to do business with their local bank. Advantages to working with your bank might include familiar faces, access to your financial profile and a history of doing business. If you choose to work with a mortgage broker you will have an advantage in the market place. The broker will check interest rates with many lenders to determine who has the lowest rate for your specific situation on that particular day. If mortgage rates go down the broker can lock in a lower rate with a different lender and if mortgage rates go up you are protectd by the locked in rate.

The most important thing to remember when considering a refinance is to compare accurately. You must compare the length of the loan, whether the interest rate is fixed or adjustable, how much the interest rate is, what fees are associated with the program and whether or not you are being asked to pay points. Many mortgage lenders will give you a low interest rate while raising the fees and adding points. Be careful and good luck.

A mortgage property is a security for the performance of the obligation, usually the payment of a debt. While a mortgage is not a debt, it is evidence of a debt. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate 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.

 

Mortgage quotes help us to estimate our budget so we can determine the price of the homes we should be shopping for or how to get the best interest rate for our refinance. Mortgage quotes give an indication of mortgage rates that allow us to estimate our expenses to achieve a good result. To estimate mortgage rates, visit the Internet and employ the calculators free to use at the real estate sites online. Mortgage brokers are well equipped to find mortgages which are tailored to many different situations, if your situation is ‘non-standard’ we should consider using a broker. Mortgage brokers are regulated by various authorities usually determined at the state level.

Mortgage rates forecast must take into account the fall-out from the sub-prime crisis now poorly named, because the crisis has spread from the high-risk and sub-prime sector to even the prime mortgages.

 

There are several ways in which the sub-prime crisis affects mortgage rates forecasts.

Each Mortgage Rates Forecast Rises Due To Increasing Risk,

Any Mortgage Rates Forecast Rises Due To Falling Supply And Rising Demand.

Our Mortgage Rates Forecast Rises Due To The Falling US Dollar.

Comparing mortgage rates can be confusing and difficult if you are unaware of the terms used to describe the actual cost of a mortgage. Comparing mortgage rates is much easier if you understand the terminology and can get a handle on the actual costs of a mortgage.

Mortgage rates are the interest that is paid on the money that borrowers are lent. Borrowers have to pay interest to lenders for the service of lending money.

Mortgage rates in California are affected by many factors, such as the credit score of the borrowers, down payment made, amount of the loan applied for, and the policies of the lender. The mortgage rates are mostly front-loaded, which means that the initial payments are used towards paying interest on the loan, not the principal. To compare the rates available for mortgages, borrowers can approach many mortgage brokers in California. These brokers have the expertise and experience to help their customers find the best deal. They have access to many mortgage plans of various companies, and can therefore help in comparison of rates and features.

 

The real estate market has witnessed a boom in recent years. This has resulted in people buying homes earlier than they anticipated. Further, many home owners are finding it possible to upgrade to bigger houses without increasing their current mortgage installments. Mortgage loan rates are decided by lenders on basis of the type of property, number of occupants and credit history of the borrower. To get the current mortgage rates, borrowers can request mortgage quotes from the Internet or a mortgage broker.

Current mortgage rates are at a low providing homebuyers many loan options throughout the buyer friendly housing market. Present mortgage rates are very appealing to consumers looking to purchase their first home, move up the ladder to an upscale house, or refinance the present home. Current mortgage rates offered through many mortgage loan companies are highly competitive, offering consumers leverage while negotiating the best rates for their financial situation.