What do you do when your loan is about to adjust?

Well, this is a problem which many people face today. What do you do when you loan is about to adjust? That is the magical question...

A few years ago, you probably bought a wonderful home and were misguided by your loan consultant. Your loan consultant advised you how great of a deal an adjustable mortgage was and you went for it due to the repoir and trust that you developed with your loan consultant.

What your loan consultant failed to tell you was that they were making a huge commission from your ARM (Adjustable Rate Mortgage) loan.

Due to the "Teaser" rate which you received from your adjustable rate mortgage, you initially believe that life is great until reality kicks in.

At some point in time the teaser rate goes away and your notes adjusts to the current markets rate. As a result, your payment goes from $1500 a month to $2300 a month. You now find yourself in a tough situation and your options are as follows:

1. If you have 70% loan to value on your note, you can refinance your property to a fix rate
amortized over a 40 year period. By doing this you can take advantage a fixed rate mortgage
and your payments should be close to what they were initially.

2. Your second option would be to "Tough it Out". This is an option for a person/family with
little or no equity who wants to desperately stay in their home. This option will require lots
of sacrifice however, you have to do what you have to do.

3. You can sell you home for a future price and stay put for awhile. In layman's terms, you could
sell your home utilizing a lease option where someone gives you option consideration
(down payment) By receiving option consideration from someone you are giving them the
option by purchase your property at an agreed upon time in the future.
This gives you the homeowner extra income to stay in your home when the price adjusts.
At some point in time the optionee may exercise their option to purchase the property or
they may not. If you are interested in learning more about this call me at (888) 827-7052

4. An outright sell. This probably isn't your goal however its better to sell then receive a
foreclosure on your credit!

Whatever you decide to do, Good Luck. I wish you the best.

What are your thoughts on PMI???

A Few Notes About PMI Insurance and other debts
Thursday, August 09, 2007, 2:00:22 PM Trent

Note: I was informed by several readers that PMI traditionally stands for private mortgage insurance, so I updated the article to reflect that.

Many first time homebuyers are daunted with the prospect of saving up six figures to afford that 20% down payment, so they often take out home mortgages for less than a 20% down payment. This usually means that the dreaded private mortgage insurance (PMI) is part of the deal.

What’s private mortgage insurance? PMI refers to an insurance policy on your mortgage. Lenders often require that borrowers who don’t have enough cash for a 20% down payment take out a PMI policy. This policy generally costs between 0.5% and 1% of your mortgage annually.

How do you get rid of it? Generally, your PMI goes away after filing paperwork with your lender. This usually requires that your house be reassessed and it be shown that you currently owe less than 80% of the value of your home.

For many people, reaching that 80% threshold and getting rid of that PMI is a major goal. Their philosophy is that they’re just throwing away that 0.5% or 1% a year on PMI that they can reclaim, so they hurry up to pay it off. While this makes a lot of sense at first, paying off your mortgage early to get rid of PMI might not always be the smartest choice.

Here’s an example that a reader sent me a while back. He had a mortgage at 5.875% fixed and a PMI at 0.6%. However, he also had an auto loan at 7% and a few outstanding credit card bills way over 10%. He told me he was paying the mortgage early to get rid of that PMI. I told him it was a bad move, and here’s why.

The best way to determine the true impact of PMI on your finances is to add together the mortgage interest rate and the PMI rate and use that as the basis to determine which loans you should pay off first. So, in the example above, the effective mortgage rate would be 6.475%. Thus, the smartest move for that person to make would be to pay off the credit cards and pay off the auto loan before worrying about prepayments on the home loan at all.

What about when the PMI disappears? Once the PMI is gone, it’s a good time to re-evaluate which debt should go first. Let’s say, for example, the individual above has a car loan at 6%. That person should pay off the home loan down to 80% before paying ahead on that car loan. Then, when the PMI is gone and the interest rate on the mortgage goes down to 5.875%, then the person should focus on getting the car paid off.

In short, don’t let the fact that you can make the PMI disappear cloud you from making sound debt repayment choices. Treat it as extra interest on the home loan and use that as the basis for determining whether mortgage prepayment takes precedence over paying off a car loan - just compare those rates.

When is the correct time to invest in Real Estate

You know it's funny. A year or two ago, everyone wanted to invest in real estate. Now a days no one is interested in the market. The truth of the matter is..... NOW is the time to buy real estate. True wealth is made from buying and holding good homes in good neighborhoods.



Once the property is held for a while many options present themselves to the investor. What are your thoughts on the current real estate market?



http://www.h-investments.com/