Low Cost Mortgage Leads

Take the case of a house which is available for sale for a price of $100,000 and for which the seller accepts a down payment of $25,000. For the rest, he agrees to accept a monthly installment of a certain fixed amount from the buyer. Now consider a situation where the seller is in an urgent need of liquid cash. It is here that note buying comes into the picture. The seller can contacts a note buyer to whom he can sell the promissory notes. These promissory notes refer to the monthly installments, which the buyer of the house has to pay. The buyer will now pay the installments to the person who has bought the promissory notes from the seller of the house. The seller can sell all the promissory notes, or a part of them, with an agreement that all or the partial fixed (in case only part of the promissory notes have been sold) mortgage payments would go the note buyer until the debt is paid off. There are other ways also on how notes work. The seller and the note buyer can also decide to divide the monthly installments between themselves. The option, which the seller chooses, will depend upon the urgency and the amount of his or her cash requirements. There are certain fixed standards upon which note buying is based. First consideration is the outstanding balance and the period of time until the value of the note materializes. The value of property is also taken in to consideration. There are many companies, which buy mortgage notes in exchange for a lump sum payment. The process is very simple. The promissory note holders put their notes on bid. The investors review these notes and ensure if they fit in their portfolios. Then they bid on those, which are of interest to them. At the end of the deal, the investor gets the notes and the seller the payment. The process of note buying and selling also involves additional fees like transaction fee, appraisal fees, tax certificates, and escrow fees. This additional fee is allocated between the seller and note buyer during the contract phase of the transaction.

When you apply for a refinance, debt consolidation or purchase mortgage, one of the most important factors in qualifying for the loan is your income. That may not seem like much of a surprise, but you may be surprised at all of the different ways your income can be calculated based on how well you can document it, and how much this can affect your loan process. Get a leg up on the loan officer and learn how to determine your income yourself.

Your lender looks at your income on the basis of how well you can document it, and will allow you to borrow more money at lower rates the more you can document your income. If you have been in your job for a while and have years of W2 statements, IRS filings, and bank statements you probably fall into the Full Documentation or “Full Docs” basket. Typically you can borrow the most money as a percentage of the property’s value with a full doc income verification.

If you are on a salary and you get two checks a month, take the gross amount before taxes on your check and multiply by 2. That’s it, that’s your income (of course you’ll need to present a little bit more documentation to the lender!).

If you get paid once every two weeks you can multiply the gross amount before taxes on your check by 26 (as there are 26 pay periods in a year) and then divide by 12, the number of months in the year.

Hourly employees should multiply their hourly pay by 173 to get their monthly pay, unless of course you earn substantial overtime or commissions.

In the event you earn substantial overtime or commissions/bonuses, you will have to pull out your W2s from the last few years and average them, usually just the past two years are used. So add up all sources of documented income for each year and divide by 24.

Self-employed / 1099 individuals should pull out Schedule C of their last two tax returns, add up the Profit line (which indicates how much money you told the IRS you made) for both years and divide by 24.

If you earn money from rental of a property or any part thereof, you must have a legal rental contract and necessary local approvals to rent the property just to include the rental income at all, and you will only be able to use a portion of this rental income because lenders will assume that there is some risk of vacancy in the future.

If you cannot fully document and verify your income or the bulk of it comes from commissions, bonuses or self-employment you may be able to apply on the basis of “Stated Income”, where if you have a sufficiently high credit score (in most case 620 or better but in special cases as low as 580) you are allowed to simply state to the lender what your income is. Stated income loan programs generally reduce the amount of money you can borrow in a cash out refinance, debt consolidation or purchase loan, and people who are on a fixed income such as social security or pension are not eligible for stated income programs. There are also a variety of limited document programs and even no document or “no docs” mortgage programs available for people with good credit and fixed incomes who need to borrow less than 70% of the value of their property.About the Author: Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on debt consolidation, refinancing & investor loans. Website: http://www.RefinanceOne.net
Source: www.isnare.com

When you start thinking about buying a home, the first thing you should be considering is your down payment and cash for fees and closing costs, and then you’ll have to show your lender how where you got the money for the down payment. The best place to start the process is by documenting and verifying the contents of your checking, savings and money market accounts at your bank. But for those of you who have most of your money invested outside of your checking and savings, you may wish to look to your brokerage account and its contents: stocks, bonds, mutual funds etc., to show your lender the money. Still in many cases it may not be advisable to liquidate well performing investments to make a down payment.

If you have a brokerage account in good standing, documenting these assets is simple. Open up your filing cabinet and find the most recent statement of your account. Your lender will likely require that you need a current (thirty to ninety day old) brokerage account statement for documentation of the assets.

If you own shares in a mutual fund or any stocks or bonds which were purchased outside of the brokerage account, please produce hard copies of any proof of ownership and submit copies to your lender clearly explaining the situation. For example, if you have 1,000 physical stock certificates of Berkshire Hathaway A gathering dust in a safety deposit box or fireproof safe somewhere, you’ll want to take photocopies of the certificates and if necessary get a letter from the company’s registrar confirming your ownership of n number of shares of the company in your name. The same is true of all instruments which you may have physical copies of, but it is important to note that shares of private companies will not benefit you in verifying your assets for the lender. Mutual funds often provide separate statements which you can produce for your lender’s satisfaction. Be sure to present statements which are no more than 30 days old.

So everything we’ve talked about so far refers to the verification of assets, but if you are planning on selling all or part of these stocks, bonds, mutual funds or any other securities to make a down payment or pay for fees and closing costs on your new home and mortgage respectively, it is critical to keep every single piece of paper, email, bank to bank wire / telex, or other communication which documents the sale or other liquidation of the assets and any receipts which show how you got paid for raising money against or through these assets. Be thorough, be detailed, because most lenders will be obligated to ask you a lot of questions about the liquidation of such assets to cover a down payment on your new home or closing costs on your mortgage.

If you deposit funds from the sale of securities, including stocks, bonds and mutual funds into a savings, checking or money market account, try to put the money in the same bank where you are keeping most of your accounts, which will simplify matters and make it easier to substantiate the sudden influx of cash from the sale. And hang on to those receipts!

Stocks, bonds and mutual funds are an excellent source of capital for the purposes of establishing that you have reserves of assets which could be used in emergency situations such as unemployment, disaster or injury, however it is difficult to recommend liquidating these assets for use in marginally reducing your rate of borrowing on a home loan. Generally, it is best to discuss the matter with your financial advisor to weigh the comparative performance offset between the appreciation of these investments against whatever savings you might realize by liquidating them for use as a down payment.About the Author: Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on debt consolidation, refinancing & investor loans. Website: http://www.RefinanceOne.net
Source: www.isnare.com

If you are a first time home buyer who has been out shopping for that dream house, you’ve probably already heard your real estate agent or property developer’s first question: “How much will you be putting down?” If you have excellent credit, several years of consistent income on record and a relatively long history of using credit wisely, you may qualify for 100% financing, often referred to as a “No Money Down Mortgage” or “Zero Down Home Loan”. But for the majority of new borrowers, a down payment is a prerequisite to buying a house, and finding 20% to 30% or more of the purchase price of a house can very often entail getting the money from family or friends. Getting that much money together can be tricky enough, however lenders will also require that every dollar used for a down payment be documented back to a specific funding source, and this can be particularly difficult when the money comes from a third party, which is why we have “Gift Letters”.

Newlyweds and young people generally have neither sufficient credit history nor income consistency to qualify for 100% financing, and are also the least likely to have sufficient savings and acceptable documentable assets to actually come up with the cash to make the down payment. Members of the family are in some ways the best and very often the only available source of down payment assistance available to “green” borrowers. Your lender generally will only allow you to use money given to you by a true family member, i.e. your mother, father, brother, sister, uncle, aunt, grandfather, grandmother, first cousin, etc. This means that you cannot use funds given to you by people who are really not family members, for example your friends or colleagues, however you may be able to use funds from a non-family third party if you can provide documentation of a very close and long lasting relationship. This is done primarily to prevent people from taking out personal loans which will have to be repaid to come up with their down payment, which have the potential to throw off the person’s debt to income ratio, or DTI. Basically, they don’t want you to take on more debt than they believe you can safely repay, otherwise they would have qualified you for 100% financing.

If you find yourself in a situation where you need to get money from your folks or other family to make a down payment on your new house, you will be required to prove that you did not borrow the money from them with an expectation on their part that it be repaid or with an intention on your part to repay it. In fact, both you and your family will need to prove to your lender that the money was given to you, in the form of a Gift. To verify that the funds are in fact given freely, your lender will require special documentation.

If you are applying for a new mortgage, you should receive as part of your loan application package a special form called a “Gift Letter”. The goal of this letter is to identify the source of the funds and assure the lender that they are in fact a gift. Typically, a gift letter will include the name of donor, the name of the recipient, the relationship between the two parties, the amount of the gift, the address of the property for which the gift is to be used to pay for, the fact that no repayment is required or expected, and an assurance that the person making the gift or the source of funds is not in nay way party or beneficiary to the transaction, e.g. not the broker, seller, agent, loan officer, builder and so on. In most cases the person giving the gift will be required to document where the money came from, such as a bank account or a brokerage account. If you are depositing the funds directly into escrow, or even if they are going into your bank account, take some precautions to document the transfer by keeping copies of the checks or deposit tickets/receipts from the bank/escrow agent.About the Author: Tristan Hunt is a seasoned financial professional with a wealth of experience in the mortgage industry, advising clients on debt consolidation, refinancing & investor loans. Website: http://www.RefinanceOne.net
Source: www.isnare.com

Locking with a mortgage broker isnt quite the same as locking
with a lender. In most cases the broker will follow your
instructions, locking with the lender when you tell him to.

Some brokers, however, will charge borrowers the lock price but
wont lock with the lender. If the market doesnt change, they
pocket the price difference.

Brokers rationalize this practice on the grounds that they
protect the borrower themselves. The broker plans to absorb the
loss if interest rates go against them. (In effect theyre
acting as speculators.) But what happens if interest rates spike?

Heres an example.

For example, in the two-month period of late January to early
March 1980, rates on 30-year fixed-rate mortgages jumped from
12.88 percent to 15.28 percent. A broker who locked for 60 days
at 12.88 percent would have to pay a lender about 15 points to
accept a loan with that rate in a 15.28 percent market. The
broker would either go out of business, or deny that a lock was
given. (Broker locks are oral commitments.) The borrower would
be left high and dry in either case.

A broker “locks” is an unscrupulous practice because the
borrower is led to believe that the lender is providing the
lock. How do you protect yourself? Easy – simply insist on
receiving the rate lock commitment letter from the lender
identifying you as the applicant.

In principal a lock commits the buyer as well as the lender. A
borrower who wants to be protected against a rate increase
during the lock period, but would like to take advantage of a
rate decline, can purchase a “float-down.” A float-down provides
the same upside protection as a lock, plus an option to reduce
the rate if market rates decline.

Since it carries more value to the borrower than a lock, and is
more costly to the lender to provide, the borrower pays more for
it. A lender who charges 1.25 points for a 60-day lock might
charge 1.75 points for a 60-day float-down.

Many refinancing borrowers pay for a lock but act as if they
have a float-down. If rates decline during the lock period, they
demand a lower rate and if they dont get it, they start over
with another loan provider. While that isnt ethic, many people
do it.

Heres my best advice in regards to locking: If youre
comfortable with the rate you are receiving, go ahead and lock.

If interest rates fall, you may be disappointed, but the
interest youre paying is at least something you have rationally
decided youre comfortable with.

If rates rise, youre protected from paying more than you might
be able to afford. And once you lock, get proof of the lock in
writing.

About the author:
Gus Skarlis is the only person in America that can get you the
best loan program, get you any vehicle at dealer cost, show you
how to correct your credit, beat any speeding ticket without
using a lawyer and save you money at the Gas Pump everytime…
You can find his infomational site at http://www.GusSkarlis.com
or you can contact him directly at 702-491-7251