Chasing the Refi . . .

So you keep hearing that interest rates are low. You're probably asking yourself if it's time to refinance. Well, that depends. Here are a few things to consider:

• Are you currently paying mortgage insurance and will that go away because you have enough equity in your house? If you are able to get rid of the mortgage insurance premium you could actually take that extra payment and put it towards your principal, paying your mortgage down quicker.


• Your payment right now is so high it's painful to make the payment and refinancing would make the payment more manageable.


• Do you have equity in your house? If not, you may be faced with having to refinance into a a FHA loan and that means you will have mortgage insurance.


• Your payment may go down but you may be paying longer. For example, you are 5 years into your 30 year mortgage, you refinance and now the clock starts over because you refinance into a new 30 year mortgage. One way to combat that is to get a 25 year, or even 20 year mortgage.


• What is the cost to refinance? For example, if it costs you $8,000 to refinance and it will lower your payment by $150 a month- how long will it take you for you to recoup the savings? Take $8000 and divide by $150 that would mean it would take you 53 months or 4.5 years to recover that $8000. So unless you're planning on staying in your house for at least 5 or more years you might want to reconsider whether it's worth refinancing. One way to combat the cost is to take your current money being held by your lender for your insurance and taxes (called escrow) and your payment you get to miss the month after you refinance and put that towards your refinance costs. That could cut the costs of the refinance in half, thereby giving you a short time line to recoup the costs of refinancing.

Remember this is all very general, there are a lot variables and more things to consider that aren't discussed. So before you decide to chase the refi craze, run the numbers and make sure they work. You may just decide you're better off right now without refinancing.

For more real estate information be sure and check out http://www.elkesellshomes.com/ or call 301-865-9561

Help! I'm in Financial Trouble!

One of the most stressful times in life is when the joy of home ownership turns into a burden. Let me say this again: IT'S NOT YOUR FAULT! That's the first thing you have to come to realize.

So many variables have played into the current housing market. Most, if not all, were and are out of YOUR control. As I tell my distressed sellers, you are not alone. Look in the grocery store, at work, your kids school, your friends . . . they're going through the same exact crisis, you just don't know it.

There is hope. . .that’s HOPE through the Maryland Department of Housing. http://www.mdhope.org/ Maryland Department of housing has created a site for Maryland Homeowners. They provide a network of counselors and various programs to help you refinance and catch up on payments. This is a great place to start.

Next I highly suggest talking with a lender who is familiar with the HOPE program.
There are several options for you.

□ Reinstatement:
This is where you pay back the lender the outstanding amount that you are behind.

□ Forebearance:
This is a temporary repayment plan where the lender sets up repayment for the amount you are behind.

□ Refinance:
This is when you get a new loan with reduction in monthly payments. Many people are actually finding that their payments will go up if they are in an interest only program.

□ Loan Modification:
This is when the lender allows the original loan terms to be modified. Examples are extending the term of the loan, and sometimes (though rarely) adjusting the loan balance downward.

□ Sell the Property:
You use your savings to pay off the difference between your selling price and what you owe the lender.

□ Rent the Property:
Keep in mind you must keep your loan current. I highly recommend using a property manager when you have a rental property. The last thing you want is your now ‘investment property’ to be destroyed.

□ Short Sale:
This is when you negotiate with the lender for the lender to accept less than what you owe. For most, this is the best option.

□ Deed in Lieu of Foreclosure:
This is called a 'friendly foreclosure'. You are going to the bank and in essence handing them the keys.

□ Bankruptcy:
This is your last resort and typically will stall foreclosure but not prevent it.

One of the options available to you is a 'Short Sale'. No matter where you live in the country, even Frederick Maryland you have probably heard of a ‘Short Sale’. A short sale is when a homeowner owes more to the lender than the market value of a property. For example let’s say you owe $320,000 and your home is now only worth $250,000. So in order to sell the owner has to go to the lender and ask the lender if they will accept less than what they owe.

The lender is not in the 'Home Selling Business'. They don't want your house. It's very costly for a lender to foreclose on a home. Also, a short sale will do much less damage to your credit and will allow you to purchase another home much sooner than if you allow your home to go to foreclosure.

To do a short sale you will need a lot of patience. Every lender has different guidelines and rules. Some lenders will ‘pre approve’ a short sale and some lenders won’t even consider it until you have a contract on your home with a buyer to purchase. Also, the process timing can vary. It can take anywhere from a few weeks to several months for a short sale to be approved by the lender. So be patient. It can work, it just takes time and diligence. Also, keep in mind, if there’s more than 1 lender (like a home equity line, 2nd mortgage or 3rd mortgage) each lender will need to approve the short sale. Each of these lenders have different processes and will take more time to give approval.

I've heard people say they're just going to let their home go to foreclosure. Don't do this if you can help it. People don't realize, but just about everything you do is tied to your credit. Your car insurance, credit cards (they will actually increase your interest-regardless that you've been paying on time to astronomical amounts), cable, phone, cell phone, electric, Employment (even your current employment).

If you have questions and you just don’t know where to start, feel free to give me a call at 301-865-9561 or check out my website at http: //www.ElkeSellsHomes.com

category: Real Estate

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