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Nothing compares to the confusion that occurs during the mortgage process, especially if you have never purchased a home. I am a very prepared person when it comes to finances, but even I learned some extremely valuable information.
So what does this mean for you, the borrower? If you are borrowing from a juggernaut organization like Freddie Mae or Fannie Mac, need not worry. Both Mae and Mac are only under a federal government guardianship of sorts and are still, “legally separate from the federal government.”
Imagine you’ve had your house up for sale for two years. You bought a new house before you could sell your old home and you’re paying two mortgages. Finally, two prospective buyers come along. One buyer, a first-time homebuyer is waiting for approval on a mortgage loan; the other is a cash buyer.
Which way are you going to go?
Just remember that if you're trading up, make sure it's a move that you can afford. Just like you figured out with your starter home that you were going to be able to afford the mortgage...
If someone falls, the humane reaction is to lend a hand and help him up. If a family cannot pay their mortgage, in a perfect world, the bank would work with the borrowers and help them figure out a mortgage they can pay.
That’s the theory behind loan modifications – lending a helping hand to the borrower. But instead, banks have lent one hand and then pushed down with the other. Loan modifications rarely work. Lenders lose documents and delay the process, or they modify the loan to terms that really are not much better than they were before.
The Wall Street Journal ran this story on Sunday about how many homeowners are refinancing in an effort to get a shorter term – often switching from a 30-year to a 15-year – so they can get out of debt faster.
This reminded me of a conversation I had several months ago with mortgage expert Dale Vermillion for this story on taking a common sense and long-term approach to choosing a mortgage.
Fannie Mae launched a new website on Tuesday designed to help homeowners know their options to try to avoid foreclosure.
The site – KnowYourOptions.com – provides several options homeowners have to avoid foreclosure, with options that allow homeowners to stay in their home (refinance, repayment plan, forbearance, modification or deed-for-lease) or options that allow homeowners to get out before they are foreclosed (short sale or deed-in-lieu).
Here’s an association you probably would not make: Pizza, pregnancy and… mortgages? Lenders are digging deeper to find out more about borrowers.