Kristin Gabriel asked:


Confusion among homeowners due to ineffective and complex mortgage disclosures resulted in a study by the Federal Trade Commission in which 800 percent of mortgage customers were given disclosure forms for an abstract loan. The message is loud and clear there is a need for easy to read and comprehensive mortgage terminology.

A Los Angeles Times article written on June 14th describes how most borrowers are perplexed by the complexity of mortgages. Kristof shows how most borrowers are perplexed by the complexity of mortgages due to an unsuccessful explaining of costs and the risks of home loans as well as a lack in the understanding of the terminology.

In a press release issued May 7, 2007 by the U.S. Department of Justice and the Federal Trade Commission (FTC) the purpose of the joint report, “Competition in the Real Estate Brokerage Industry,” is to inform consumers and others involved in the industry about important competition issues involving residential real estate, including the impact of the Internet, the competitive structure of the real estate brokerage industry, and obstacles to a more competitive environment.

In a complicated world that demands constant attention and offers an array of choices, the fact is, consumers prefer less choices and simplicity. A number of details lead to complexity and this can overwhelm consumers. It is all too common; the more choices we have the more we struggle to choose.

Have you ever heard of anybody complaining about the bundling of gas prices? What you don’t see is that the local state and federal government each gets one third or 33 percent of money in taxes, while the oil companies get ten percent and gas stations get five percent. As far as gas prices, where does the money go? Nobody cares.

Itemization of many of the details in mortgage disclosure documents often confuse people. Perhaps, a bigger problem is the deceptive tactics often used by the mortgage lenders to sell home loans to consumers as shown in the study.

Deception is also more of a problem than just confusion. New companies will resolve the confusion, including services where real estate agents and lending professionals can facilitate approval and processing of loans for customers faster.

Consumers should look for companies like this that provide a clear diagram of the program class loan amount, total down payment and closing costs, monthly payments, loan rate, APR, commission, and agent yield. Borrowers can identify the loan amount, the upfront cost of the loan, penalty amounts, the annual percentage rate, the amount of cash due at closing or the monthly payment, and if the payment included charges for property taxes and insurance.



JOHNATHAN

Jonathan Drake asked:


Current home loan rates are rather low these days. This is mainly due to the fact that the number of people who are looking for loans are dramatically decreasing because of global recession that everyone is currently experiencing. And so, to be able to attract more loaners, mortgage lenders just opt to lower down their interest rates since this is a much better choice compared to that of having nothing at all.

Applying for home loans are the easiest and fastest way that one can take so as to have one’s dream house. With a lot of mortgage lenders out there whom all of which are willing to provide one with the necessary assistance that one needs upon purchasing a home, it is just a matter of choosing the right mortgage lender that can satisfy one’s need.  Then again the task of choosing the right mortgage lender is quite difficult. This is because there are a variety of loans that is present out there from a 15 years loan mortgage to 30 years, 40 years and even 50 years. There are also those whom offer either a fixed rate or an adjustable rate of interest. In fact, there are other options that one must choose from, and so with that, it is no wonder that choosing the right mortgage is quite a difficult task to do. Then again, with the proper knowledge and patience, one can be rewarded with the best home loan that one can use so as to be able to purchase one’s dream house.

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BURTON

Blank asked:


Interest rates and home prices have risen over the years making it harder and harder for first time buyers to qualify for a home loan. Many financial analysis say now is the time to buy a house before rising rates price you totally out of the market. But what if you have bad credit? Can you buy a home right now if your credit is not up to par? For a lot of consumers with bad credit the answer to that question is yes. If you have had credit problems but have a minimum credit score of 580 and stable income, in most cases, you will be able to qualify for a bad credit home loan aka sub-prime mortgage loan. Sub-prime mortgage loans specifically cater to people who have had credit problems such as bankruptcy, late payments, judgments, collections and a high debt ratio. So… what this means is if you have these type of problems you may still be able to buy your dream home now rather than having to wait years while you try to clean up and re-establish your damaged credit history.

With a bad credit home loan you should expect to pay a higher rate than you would with a standard conventional loan. How high of a rate you pay will depend on several factors:

Your credit score

Your debt ratio

The severity of your bad credit

The lender you choose

If your situation places you on the higher end of the interest rate scale then you should view your loan as a temporary solution to turn you into a homeowner with the ultimate goal of improving your credit standing so that you can refinance to lower rate loan in 2-3 years.

Bad credit home loans are not available from all mortgage lenders. Only those lenders who specialize in or offer sub-prime mortgage loans will offer these programs. Make sure you are honest up-front about your financial situation and your credit history when you go to apply for a home loan so that your credit does not get pulled needlessly by a lender who does not even offer the kind of loan products unique to your situation. Just one unnecessary inquiry hit to your credit can be disastrous if you are teetering on the brink of the minimum 580 credit score because every time your credit report is pulled it has the potential of lowering your score even further.

Most lenders who do offer bad credit home loans will advertise this fact. There are also resources on the web that can steer you in the right direction. Websites such as http://www.badcreditloanshop.com and http://www.equityloansource.com offer a wealth of information on home loans for people with bad credit as well as sub-prime mortgage lender sources.



KURT

Kristin Abouelata - Home Loans asked:


If you’ve ever applied for a mortgage, particularly since credit guidelines have tightened in the past few months, you know that the amount of information you must divulge to your lender could sink you financially if it were to get into the wrong hands. That’s really kind of scary when you ponder it a bit. I mean, after all, they have your social security number, your birth date, your bank account numbers, and a hair sample (just kidding on the last one). But, really. How do you know that you’re protected?

The Gramm-Leach-Bliley (GLB) Act requires companies defined under the law as “financial institutions” to ensure confidentiality and security of your personal information. Which includes mortgage lenders. In addition as part of this act, the Federal Trade Commission (FTC) issued the Safeguards Rule, which mandates measures to keep customer information safe.

So, if you apply for a mortgage and you’re concerned, your lender should be able to provide you with a written security plan that describes their program to protect you. The plan’s appropriateness should vary in relation to the company’s size and complexity, and the nature and scope of its activities. You wouldn’t expect a company with 20 employees to have the same guidelines as a company with 2000 employees. But there will be some similarities.

The written plan should outline that all staff be trained and informed of the policies. That’s important. How good is a plan if no one knows how to implement it? Typically, a lender should have several methods to detect identity theft apart from suspicious documentation or squirrelly applicants. Most use third party sources to verify a customer’s identity beyond driver’s license or government issued identification. These are background search programs with weird names like Lexis Nexus and Interthinx. And they work.

The company’s policy should require employees to change their various passwords regularly and have good security systems in place to prevent “hackers” from accessing your information. We hear time and time again the horror stories of hackers and their nasty activities. Furthermore, the company should shred documents and lock away files at night. Who wants their W-2 showing up in a company’s dumpster? Who wants the nosy cleaning crew thumbing through their file? Not me. Not anyone.

Furthermore, the staff needs to be educated as to how to detect fraudulent documentation or suspicious activity. And they need to understand they shouldn’t discuss your information with any other employees that don’t need access to your file, nor should they discuss your profile with the spousal unit at home. It’s kind of like being a doctor. They can’t discuss patient’s medical records. A lender can’t discuss your financial records.

And what happens if a lender suspects a borrower has been the victim of, or even creepier, is committing identity theft? The lender should have clear guidelines as to how the individual discovering the discrepancy should handle the “red flag.” After all, when the red flag arises, how does the lender know if she’s talking to a victim or a perpetrator at the time of discovery? So, it has to be handled correctly. And the lender’s employees need to have a clear understanding as to exactly how to handle these situations.

So, when you apply for a loan, find out upfront if you’re being protected properly. You’ve got enough to contend with these days when obtaining a mortgage. You deserve a lender who complies with these regulations and acts. We all deserve this protection. 



EMMANUEL

Helen Bassett asked:


With booming real estate markets, greater lending competition and high consumer confidence, there has never been a better time to purchase your dream home and, by doing your homework before taking on a mortgage, you can get a better value investment for your dollar.

There are a few secrets and simple tips buyers should know before shopping for a home loan mortgage. The first, and most important of these, is to do your homework. Home loans vary greatly and it’s important you find the one that best suits your situation.

With the rapid growth of online private investors, even people who the banks and major mortgage lenders won’t deal with can usually qualify for a home loan.

Potential purchasers should study their local real estate market to get a feel for what suburbs offer the best value and investment return potential, they type of property you are seeking, and how long you plan to live there for.

Once you have a good idea of the property you are seeking and its price, work out your budget, list all your assets, and decide how much you can afford in repayments.

If you qualify for a loan from a bank or major mortgage lender, it is usually best to approach them for a loan, and don’t be afraid to negotiate on their establishment fees and interest rate. After all, there is plenty of competition and they want your business!

If you don’t fit into this category, you can still apply for a loan from an online private investment group who will lend on the basis of no credit checks, no income or employment verification, no tax returns, and no prepayment penalty.

The difference between the major lenders and these investor groups is that the former lend not only against the value of the property, but who is acquiring it based on income etc., whereas the latter are only interested in the value of the property.

You need to check the fees for private investor loans as they are usually slightly higher than conventional loans, but they give people the opportunity to buy their own home when otherwise they would be stuck in the rental cycle.

There are some type of homes, such as mobile homes, homes on stilts, or other unusual structures which may be rejected because their value may be an unknown quantity should the borrower default and the property has to be sold.

Lenders are more willing to provide money for home loans than any other type of loan because they know purchasers will always meet their mortgage repayments ahead of other payments, to protect their asset and keep a secure roof over their family’s head.

This makes it easy for almost anyone to get a home loan, but always remember the repayments have to be met, so don’t borrow more than you can handle. It’s a good idea to always keep your payments one or two months ahead so if anything does go wrong you have some breathing space.

So, by doing a little extra homework at the beginning, you should end up with your dream home and a reasonable mortgage that let’s you sleep easily at night!



GUADALUPE