1 – For starters, do not ignore the problem. As you become further and further behind in your finances, the more difficult it will become for you to reinstate your mortgage loan. The harder it becomes to reinstate your mortgage loan, the more easily your lender will find it to take your home from you.

2 – Contact your lender as soon as you know that there is a problem. Nothing dictates that you have to wait until your lender plans to foreclose. In reality, lenders do not want your home; they would rather you simply paid your mortgage on time so that they can be paid back for their investment. Because of this, most lenders offer options to help borrowers through a number of different financial difficulties.

3 – Keep in touch with your lender in every step of the process. Open and respond to any and all mail from your lender, because the first notices that you receive will offer a lot of vital information regarding the foreclosure prevention process. By failing to keep in touch and to open the mail that your lender sends simply will not be a good enough excuse when you finally end up in foreclosure court.

4 – Know your rights and your options when it comes to foreclosure. You can find a lot of valuable information relating to foreclosure prevention or loss mitigation online. Make sure that you know your rights, as informed decision making is the best way to prepare yourself for this challenging process.

5 – Use your assets to the best of your ability. Do you have assets like jewelry, a second vehicle, a whole life insurance policy, or other types of assets that you can use to sell for cash? Selling items that you can bear to part with will allow you to reinstate your loan. Using your assets to the best of your ability can have a huge impact on your ability to repay your mortgage and to save your home.

6 – Avoid companies that charge money to do what you can do yourself. You should never have to pay exorbitant fees for help with foreclosure prevention. Use that money to pay your mortgage off instead. For profit companies will contact you with a variety of wild claims regarding negotiating with your lender, but they are doing this hoping that you do not realize that you can negotiate with your lender all on your own without their help and overpriced services.

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The finest way of having chosen one amongst the mortgage companies is that of sharing with the people around you their experiences. All you need to do is talk to the relatives or friends of yours who’ve of late bought a home.

The first and the foremost question to be asked is that whether they’re satisfied with service provided by Mortgage Company with which they had dealt with regards to purchasing of home.

Agents pertaining to real estate can also prove to be a fine source in regards with recommendations relating to mortgage companies. As agents see the people working out the monetary process on a day-to-day basis, a feel is developed for the mortgage companies that’re easy for working with, as well as the companies that aren’t easy for having worked with.

Even though word of mouth is the best way of developing the list of the impending mortgage companies, it definitely mustn’t be the only way to be used by you. Note that each and every one has diverse monetary situation. Moreover, what might work for one personality might not be suitable for the other one.

Effective use

Making use of the list containing mortgage brokers compiled by you, appointments can be made for going in and having a word with each and every one. Such an activity would give you an idea of demeanor and personality of every company.

Besides, if you face any problem regarding the calls o yours getting returned, or having set up appointments in the form of the prospective customer, the likelihood of your situation getting improved is less if the mortgage is secured through company.

Note that any of the mortgage companies fall in the category of service industries. Majority of people find process of home buying and mortgage approval do frightening that they end up forgetting that shopping should be done for the mortgage company they would be happy with.

The mortgage company must be glad to have quoted you with specified rates of interest, and intimate you regarding the time of locking in the rates.

These companies must also inform you about the specified costs involved in acquisition of a loan. In other words, you should get a fine faith estimate with regards to closing costs, origination fees, and discount, payment of which should be made, along with the other costs involved while having a home purchased.

Updating

Any of the mortgage companies must be upfront regarding every technical detail of loans. They must apprise you of penalty for the pre-payment, money needed for down payment, and the documents needed for making provisions for the approval of loans.

Mortgage companies must also inform you about guidelines that should be met o qualifying for loan, that too, with them. All this would be inclusive of your income, credit history, liabilities, assets, employment history, and the other specifications required.

Charles Bretz is a Financial Advisor and Author on Money Matters.Get Your Free Money Guide. Click Here

And when phrases like “credit freeze” get thrown around, it definitely doesn’t help things, especially when very little clarification tends to be given by those spouting it. That sort of talk unfortunately leads consumers to assume that it’s impossible to get a loan on a car or a new home, which simply isn’t the case. The U.S. Federal Government has actually taken multiple steps in order to attempt to insulate consumers from the current economic crisis and encourage continued activity in the consumer lending sector. While lending criteria has indeed tightened, many people are still able to receive home mortgage financing.

Now may in fact be the best time to buy a home. According to the National Association of Realtors, the average sale price of existing homes has dropped roughly 9.5%, which happens to be the largest fall since they began recording in 1999. The S&P/Case-Shiller 10-city housing price index also saw the steepest decline in its history, dropping about 17.5%. What this means is that those considering the purchase of a new home can potentially do quite well, as housing prices haven’t been this low in a long time.

In addition to low property prices, new FHA lending regulations also favor potential borrowers. The limits on FHA-insured loans were increased from $362,790 to as high as $729,750, depending on the location. FHA loans are currently running fairly reasonable rates and only require a 3.5% down payment, even allowing family down payment assistance.

One interest thing to note for first-time home buyers is that if you make less than $75,000 a year, you can receive a tax credit for 10% of the final sale price of your new home, up to $7,500. This credit is available through July 1, 2009. While it is being called a credit, it’s technically a loan. But it isn’t often that you can find 0% 15 year loans, so it’s a good thing as far as I’m concerned.

As I mentioned earlier, lending criteria has tightened a bit, and while minimum credit scores used to be in the low 500’s, they now often range from the upper 500’s to the low 600’s. In addition, 100% financing has become a rarity given the current economic crisis, so it’s reasonable to expect that you will need to put some money down. Lenders now typically require more documentation and proof of income as well.

It’s hard to say who will and will not be approved for a loan, so you will likely best be served by visiting a CMP (Certified Mortgage Planner) who can help you figure out which lenders will finance you, and decide on the offer that best suits your individual situation.

Rate1st is the United States’ largest online lending network, and is proud to provide a easy, efficient and safe way to shop for an FHA loan during trying economic times. To contact a Certified Mortgage Planner about information on FHA loans, please visit Rate1st.com.

So, how do so many people mess it up so badly? Simply put, people lie (either to themselves or about themselves) when filling out a loan application.

We’ll look at examples from customers who applied for owner builder construction loans, but the principles of filling out a home loan application will apply equally well to anyone who wants a loan to buy or refinance a home.

Owner builder construction loans are for individuals who wish to build their own house without having to hire a general contractor. Therefore, they manage the sub-contractors themselves and oversee the project.

However, an owner builder loan application is no different from a standard purchase loan or refinance loan application. Almost every bank across the country will use a form known as a Uniform Residential Loan Application, also known as a 1003.

On this 4 or 5 page form, you simply fill in information about your financial situation. On the first page, you’ll cover simple info about the property as well as information about your address, phone, social security number, etc.

The second page will cover your work history and income. The third page will cover your assets and your monthly debts. All in all, the process is not difficult. In fact, anyone, whether you are an owner builder or someone looking to refinance an existing home, can fill it out without too much difficulty.

Therefore, the mistakes that are seen on owner builder loan applications be due to reasons other than misunderstandings. Indeed, almost every mistake occurs when an owner builder decides to embellish his qualifications or thinks it’s unimportant to be as accurate as possible.

You may be asking yourself why it’s such a big deal. Why should you care if you round off your numbers on the application? After all, it’s just a pre-approval. The bank will collect all of the real paperwork later on.

Here’s an example from a recent owner builder loan. A loan applicant decided the pre-approval was not worth his time to provide detailed information about his financial situation. He rounded up his income and failed to mention the child support payments that he is obligated to make each month.

In the case of this owner builder, the application was pre-approved quickly and easily. Why wouldn’t it be? On paper, everything looked great. But, when the bank started collecting the official income documentation and discovered the child support payments being deducted from the pay stubs, the borrower no longer qualified for the loan.

Not a big deal, right? Wrong. This owner builder had already put money down on a piece of land that he wanted to buy as well as purchased blueprints for his new home he wanted to build. Imagine the frustration and anger he caused himself when he found he was no longer qualified for the loan and he lost the money he wasted on blueprints.

Even though this is an example from owner builder construction, it still applies to anyone filling out a Uniform Residential Loan Application. Imagine you are buying a home and make a large earnest money deposit on the house you want based on getting pre-approved from your bank. Now imagine that your pre-approval is based on inaccurate information that you told the bank. In fact, imagine that you also wasted money out of your pocket for the home inspection and the appraisal.

So, what can you do? Whether you are looking for an owner builder construction loan or any other type of mortgage: tell the truth.

Do not think that embellishing your financial picture will help. It will only hurt you in the long run when the lender discovers the errors. You are better off getting an accurate pre-approval based on accurate information.

And, if you are unsure about your exact income numbers or your exact amount of assets, then estimate conservatively. That way, if your income or assets turn out to be higher than you estimated, you will still be approved and qualified for the loan program you are counting on. It works for owner builder construction loans. It works for refinances. It works for home purchases. It works.

In fact, one great piece of advice is to supply copies of your W2 forms, your pay stubs, and your asset statements when getting your pre-approval. Many customers, not just owner builder customers, don’t want to take the time to do this, because it’s a hassle. But, your loan officer can use these documents to ensure the pre-approval is based on accurate calculations. Besides, you are going to have to submit these documents for underwriting anyway.

For example, a recent owner builder borrower took the time to submit his pay stubs when he applied for his construction loan. A big portion of his income came from bonus pay. It turned out that he could only get credit for the average of his bonus pay over the last two years, in addition to his full base salary. Therefore, his gross income was calculated slightly lower for the loan that he thought it would have been.

In this case, the owner builder fortunately still qualified for the construction loan. However, you can see how miscalculating income can lead your pre-approval to be inaccurate. Therefore, don’t take any chances. Submit your documentation paperwork when you fill out the application.

So, if you are thinking of applying anytime soon for a mortgage for a home purchase or a simple refinance, then take a lesson from the world of owner builder construction loans. Do not discount the importance of providing accurate information about your financial situation on the Uniform Residential Loan Application. The pre-approval is a quick and easy process, but it’s also a very important one. Owner builder construction loans are no different in this respect.

Chris Esposito specializes in owner builder loans, helping people act as their own general contractor to build their homes. Visit Owner Builder 101 for more information about owner builder planning and financing. Go to OwnerBuilder101.com, or call (877) 876-3688.

1. Why do mortgage insurance companies are willing to put their own money?
2. How can we know if we are insured by these insurance companies?
3. Why are these big corporations helping banks and homeowners?
4. Will the insurance companies help the homeowners also if they are not insured?

Many homeowners are not knowledgeable about their loans. Some people don’t even know their own Interest rate; therefore, I will assume that most of you do not understand the term PMI (Private Mortgage Insurance).

What Is PMI?

With a Private Mortgage Insurance, banks act as the beneficiary and borrowers make a monthly payment for the insurance. PMI (Private Mortgage Insurance) protects banks from foreclosure or short sales.

When Do You Pay PMI?

When you buy or refinance a house, you need to be aware of the loan to value, referred herein as LTV. If your loan has 80% or more LTV, most likely you will pay PMI. Remember when you could take a first loan for up to 80% of the value of the property, then a second loan to cover the reminding 20%? Well, those days are over. Today, banks want you to make a big down payment, therefore, you will have more of your own money invested in the property and they will feel more secured. The big down payment banks are asking you to put down is considered the PMI.

It might sound to you like the insurance companies are only protecting banks. That is not true, insurance companies are also protecting you, the homeowner. As I said before, insurance companies will partner with credit counseling agencies to help homeowners make their payments.

Insurance companies will contact you over the phone or via regular mail to give you information about different websites where you will find information about what to do to save your home from foreclosure.

The most important step you need to take to save your home from foreclosure is to contact your lender. The lender should be able to guide you through the process of saving your home.

This process is easier than you think. You just need to get started and you will be on your way to saving the biggest investment of your life.

Yanni Raz is a mentor for many in the Real Estate Mortgage industry, he has been tutoring many homeowners in California and helping people save their homes.
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