Daily Investment Tips

If you have an underwater mortgage, i.e you owe more on the mortgage than the home is worth, you can still refinance your underwater home. Some underwater homeowners with government-backed mortgages might be able to refinance through federal programs, such as the Home Affordable Refinance Program.

Lenders or Underwater Mortgages

The Home Affordable refinance program or HARP is US government backed program and it is only provided through government lenders.

1. Fannie Mae
2. Freddie Mac

Those looking to refinance through programs offered by Fannie Mae and Freddie Mac, the government buyers of home loans, will first need to find out who holds or services their mortgage so they can determine whether they qualify.

If your loan is owned by Fannie or Freddie, you may qualify for the Home Affordable Refinance Program, or HARP. Some 2.5 million to 3 million homeowners may be eligible to use HARP, according to government estimates — provided, among other things, that they have not been late on their payments more than once in the last 12 months.

Be carefull when trying to get underwater mortgage refinance

Apart from lenders such as Fannie and Freddie other banks have come up with underwater mortgages refinancing option. But be careful when dealing with them because they might take advantage of your situation to give you a bad deal.

written by Constantine Njeru \\ tags: Banks, Fannie Mae, Freddie Mac, Harp, Home Loans, Lenders, Mortgage, Refinance Mortgages, underwater mortgages

Loan modification enables distressed mortgage holders to reduce their principal and interest. But statistics show many American mortgage holders cant tap into the benefit of loan modification.

According to a Wall Street Journal piece on mortgages,

Most delinquent mortgages aren’t available for sale because they are locked up in so-called private-label securities (the ones packaged by Wall Street during the boom) or in the hands of Fannie Mae or Freddie Mac.

What this means is, Although a mortgage company has issued the loan, the loan is owned by third parties. The rules governing this arrangement prevent the issuer from modifying the loans. A modification would subject the servicing firm to the risk of lawsuits by the owners of the securities.

Because of this tight arrangement the mortgage companies find their hands tied and they cant help their borrowers.

written by Constantine Njeru \\ tags: American Mortgage, Boom, Borrowers, Delinquent Mortgages, Fannie Mae, Freddie Mac, Lawsuits, Loan Mortgage, Mortgage Companies, Mortgage Company, Mortgage Holders, Mortgage Loan Modification, Principal And Interest, Private Label, Qualify For Mortgage, Tap, Third Parties, Wall Street, Wall Street Journal, What This Means

When you apply for a mortgage, the mortgage lender will evaluate your application based on these four factors, capacity, capital, collateral and credit.When you meet them for face to face interview the questions will revolve around these four factors. Your ability to answer the questions in a satisfactory manner will determine whether your mortgage loan application is approved

What Mortgage Lenders Evaluate

This four factors are well explained by the following article that was originally published at Freddie Mac Website

Capacity

Capacity is your current and future ability to make payments. Lenders will look at your income, employment history, savings, and monthly debt payments.

Capital

Capital, or cash reserves, refers to the reserves of money and savings, investments, properties and other assets that belong to an individual and that can be sold relatively quickly for necessary cash.

Lenders will evaluate your application more favorably if you can verify that you have cash reserves. Cash reserves show the lender that you can manage your money well and that you can count on other funds, in addition to your income, to pay the debt.

Collateral

The lender will take a look at all your possessions and property that you can pledge as security for debt.

Credit

Lenders look at your credit and on-time payment history to see your record of paying bills and debts.

Lenders will ask for financial statements to see if you meet all of their criteria. Sometimes your strength in one area can cancel out your weakness in another.

written by Constantine Njeru \\ tags: Assets, Cash Reserves, Collateral, Credit Lenders, Debt Credit, Debt Payments, Debts, Employment History, Financial Statements, Freddie Mac, Income Employment, Mac Website, Mortgage Lender, Mortgage Lenders, Mortgage Loan Application, Payment History, Pledge, Possessions, Satisfactory Manner, Time Payment