9 Common Questions Regarding Mortgage Loans and Foreclosure
When you are dealing with your own personal life sometimes you do not have the time nor the presence of mind to sort through all the problems, so any bit of assistance and guidance helps. Here are some of the most common questions regarding mortgage loans and foreclosure; nonetheless, if you do not think your doubts have been answered do contact us.
1. The current mortgage crisis is really affected by mortgage frauds? How?
Yes, mortgage frauds will affect the current mortgage crisis. It is important to remember that frauds that are committed onto the real estate market as well as the real estate loan processes will affect not only the companies that are providing the loans. In addition, those that are buying the bonds that are being issued by the mortgage loan companies (as the means to get new financial funding to provide new mortgage loans). In addition, mortgage frauds will affect those new homeowners that have been credited with new mortgage loans as a result from the sale of those bonds.
Consequently, mortgage frauds affect the mortgage market and enhance the current crisis in an outward spiral. Therefore, it is important to conduct a thorough research on any property that one might be interested in acquiring so that there will be no ill surprises.
2. What happens to a second mortgage when a home is purchased at a foreclosure auction?
A person gets a mortgage loan when they want to buy a house; if they back fall on the payments, they risk being foreclosed. Once this happens, the whole debt as well as the property is placed up for sale. In the case of foreclosures, it can be that the buyer will acquire the property and be held accountable for the liens of mortgages, the senior and the junior one.
Of course, it might also be that the smallest mortgage will be cancelled because the seller is the current holder of both mortgages, so the company will try to recover and make the most out of a problematic situation. Sometimes mortgage lenders will place “undercover people” in the auction to bid and increase the selling price, but in the end, the final decision will come for the bidder. So it is of the utmost importance that before he or she bids, that he or she asks if who and how is the liens holder willing to go in terms of the second mortgage or the smallest mortgage on the property.
3. Can I get a refinanced mortgage if i start a home business with no employees and still work my regular job?
Refinancing a mortgage loan is an action that many borrowers seek to get the process of managing their household income in a more effective way, but it is a process that might seem complicated and hazy, so say the very least, especially to the laymen who are simple people who try their best to live a good life. In truth it is not a complicated issue, in the eyes of the mortgage company, they need to know that you, the borrower will be able to keep paying your monthly instalments in time.
Therefore, yes, you can start a home business and have a refinanced mortgage IF you can provide them with proof that you will be able to keep the monthly instalments. Even if you do not have employees, you will still have expenses to cover while you set your home business up; you will also have to prove that your debt is still under your income, so that you will not have to choose between paying your mortgage loan and buying food, for instance.
4. I have a mortgage on one home; can I get a second mortgage to pay for another house?
Yes, you can. That is the simple and most direct answer; however, there are several “buts”… The first one is that you need to prove to the mortgage lender that even though you will be taking on two mortgages your debt-income ratio is still healthy. Once again, this means that if you take on a second mortgage your income will still be enough for you not to be forced to choose between paying for groceries or the mortgage loan.
There are several alternatives, of course. One is that you can actually sell the property and in this case, ask the mortgage lender that the remainder of the debt is transferred to the new owner. Or you can rent the property so that the product of the lease will go to the payment of the mortgage, or at least a part of it, this will allow you to have more manoeuvring space with your monthly income.
5. Can you get a mortgage allowing you to bid on a foreclosed property?
It is not an easy task. This action would be considered an oxymoron, since for getting a mortgage loan you will need to go through several steps that cannot be done until the property has been awarded to you. And you cannot bid on the property until you have the mortgage loan.
One way to go about it is to approach the liens lender or the seller that is placing the property for auction and inquire or apply with them for the mortgage loan, so that your bid, if accepted, will require inside processes instead of turning around and running from one place to the next. However, it will always be recommendable that you conduct a thorough search and that you have all your documents as well as income and outcome expenses well identified.
In this manner, you will be able to provide proof that you can take on the mortgage loan and that you will not fall back on the payments, which is the first interest of the company.
6. What happens to the second mortgage when the first mortgage forecloses?
Well, according to the current legal dispositions, you will not be able to get on a second mortgage if the first one has fallen into back payments, this means that even if you try to, you will not be able to get a second mortgage until you have recovered and are current with the payments of the first one.
However, when it happens that you already have the second mortgage and you face with being foreclosed on the first one, there will be an attempt made by the mortgage lenders to try and sort things out. Then, if there is no positive outcome, they will try to seize the whole house so that they can put it for auction and recover their investment.
If you happen to be in a back payment, it will be a good idea to seek for a mortgage loan modification, so that you can keep the house and the payments under control.
7. What happens to a real mortgage when a debtor files for bankruptcy?
Regardless of the terms in which the debtor has files for bankruptcy, the assets that he has and that are worth selling will be sold. This means that the resulting money from the sale of all the assets will be used to pay back the debts that this person has. In the case of a real mortgage there are two ways that it can go; in the first case, the real estate property is sold and the owner or creditor of the property will have “first dibs” on the product of set sale so that he can recover the original investment.
In the other alternative, it could be that the real estate property is returned to the creditor (depending on the amount that the debtor still owes on the property) a then the creditor will have the duty or choice to sell the property again or in a foreclosure auction.
8. How do I calculate mortgage payments when buying a home from a family member?
Well, the first thing to consider is that as the seller of the property, selling to a family member is not as secure as selling it to a stranger through a mortgage loan company. However, when the commercial transaction (the sale) is being done, it can be done privately, meaning that the person who is buying will pay the house or real estate property in monthly instalments with an agreed interest rate (usually a percentage lower than bank interests) or with no interest at all.
The other alternative is to run the process with the participation of a mortgage loan company, in such a case, and then the mortgage company brokers will take care of the process and the calculation.
In both events and since it is a family member and communication is supposed to be better, then sit down and do some number crunching, remember that the ideal mortgage will never put you in a spot where you will have to choose between buying groceries or paying the mortgage.
9. Do you still make mortgage payments while your home is on the market to sell?
Yes. According to the type of the property, the amount that it is projected to be sold and the amount that you still owe on the mortgage loan, it might be plausible, through a contract, that you can “skip” some mortgage payments while the house is on the market. However, this is just a temporary measure, in the end, as soon as the house is sold; the amount of the mortgage loan that is owed will be deducted from the total that the house was sold for.
Once again, yes. You have to keep doing the mortgage payments while the house is on the market, especially since the current financial crisis causes so many to be in a much-stressed financial situation. Stopping payments and not being able to sell the house will put you in the fast track to a foreclosure situation and that is something that you definitely do not want and should always avoid.
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October 2nd, 2009 at 8:40 am
thanks for this useful information!!!