Mortgage Rate News

One of the issues right now in the housing market is how difficult it is to get lender financing. After all, many lenders are reluctant to lend. They’ve gone from offering loans to just about anyone to the other extreme: Getting approved for a mortgage loan can be a lot of hassle.

Which is why seller financing is starting to look mighty attractive right now.

Seller financing

With seller financing, the person offering the house finances the buyer. This arrangement can be full or in part. For example, if the mortgage lender only agrees to finance $150,000 of a $175,000 house, the seller can finance the other $25,000. Or, it is possible to get 100% seller financing, if the homeowner is willing to take the risk.

Seller financing works in a way that the buyer makes payments to the seller. This can work out for the buyer, since he or she might not normally have been approved for a home mortgage loan. The arrangement can also work for the seller, since it means that he or she will be receiving the interest from the loan, rather than a bank.

Risks of seller financing

While it can ease the way to selling a home and help you get it off the market quicker, seller financing does have its risks. First of all, the seller is the one that has to foreclose on the home if the buyer defaults and stops paying the loan. This means that it is possible for the seller to lose out. Also, the seller has to make sure all of the paperwork is in order — from loan documents to title transfer to anything else that may come up. A real estate attorney or real estate agent can help with this.

If you are having trouble buying or selling a home in this economy, it might be worth looking into seller financing. Just be aware that buyers will probably have to pay more in interest, and sellers take on increased risk.

Originally, the housing market crisis seemed limited to subprime loans and to those who made imprudent choices when buying homes. Now, though, the ripples are spreading. The housing market crisis has affected the credit market and brought down once untouchable Wall Street institutions. And today, with the announcement that Citi is planning to cut around 53,000 jobs, it is becoming evident that a vicious cycle is in place.

Unemployment and foreclosures

The subprime lending crisis has brought things to a point where the next homeowners to be affected are those who bought homes that they could afford. This is because with unemployment on the rise, it is obvious that more and more people are going to be finding it hard to make ends meet in the coming weeks and months. People are losing their jobs, and that means household budgets are about to be seriously tested. If you are in this camp, it is more important than ever to prepare for the future so that you can make your mortgage payments.

If you are worried about your job (or even if you are not), it is a good idea to do what you can now to prepare. The three most important things you can do right now are:

1. Adjust your spending to reduce unnecessary expenditures.
2. Save up some money in an emergency fund.
3. Try to pay down some of your debt.

And do it in that order. Follow a logical progression of steps to get your financial house as much in order as you can, as quickly as you can. You need to do what you can to adjust your personal finance situation to the times. If you act prudently now, you may be able to stave off problems later. And, more importantly, taking proper steps to protect yourself now can help you avoid foreclosure — even if you do lose your job.

On this Veterans’ Day, as I ponder the many great men and women (some of them relatives and friends) who have given so much for this country, my thoughts inevitably turn to the fact that military foreclosures are on the rise. In my mind, this is inexcusable. Military personnel sacrifice so much for us, including health, life and relationships, and this is fast becoming an epidemic amongst those who serve their country.

This Veterans’ Day comes as many mortgage lenders (including Citi and JP Morgan) come to the realization that all these foreclosures and problems are going to hurt their bottom lines. As a result, many mortgage lenders are now offering rather generous terms for loan modification. This could provide the means to save many homeowners from foreclosure. But I wonder how many of those saved homeowners will be military personnel.

Programs for those who are facing foreclosure are the focus of many impassioned arguments that favor letting some people reap the consequences of poor decisions. But I think that many of us can agree that veterans should have access to preferred loan terms. Indeed, many military families fell victim to problems due to their deployment. After all, one doesn’t get paid very much while deployed — especially in the National Guard or in the Reserves. Another problem is that many veterans come back disabled or with mental health issues that prevent them from picking up at their old jobs. This, too, can put a home in jeopardy.

It is vital that members of the military have homes to return to. When it comes to mortgage loan modification, lenders and the government should make sure that veterans are the first in line to receive help.

So, today, consider our veterans. And remember to find a few and thank them for their service.

Happy Veterans’ Day.

Tags: mortgage loan modification, thank a veteran, home mortgage loan, mortgage loan blog,
mortgage lenders, loan modification, military foreclosures