What is a Deed-in-Lieu of Foreclosure?

As of March 1st, Fannie Mae and Freddie Mac will allow homeowners to apply for a deed-in-lieu of foreclosure even if they have been making their mortgage payments on-time.  Until recently, the GSEs only allowed their borrowers to engage in a deed-in-lieu of foreclosure if they were more than 90 days delinquent.

What is a Deed-in-Lieu of Foreclosure?

It is a deed instrument in which the borrower conveys all interest in a real property to the lender in order to satisfy a loan that is in default. This is done in hopes of avoiding foreclosure proceedings. The deed-in-lieu of foreclosure has advantages for both the borrower and the lender.  The borrower is immediately released from most or all of their personal indebtedness that is associated with the defaulted loan.  Also, the borrower's credit is not hurt as much as it would be if they went through foreclosure.

Advantages for the lender include a reduction in the amount of time and money that is associated with a repossession. There is also a lower risk of the borrower exacting revenge by vandalizing the property before they are evicted.

It is considered a deed-in-lieu of foreclosure when the debt is secured by the real estate being transferred  Both the borrower and the lender are expected to enter the transaction voluntarily and in good faith.  However, if the borrower's outstanding debts are greater than the current fair value of the property, the lender may not proceed.

To summarize briefly, a deed-in-lieu of foreclosure basically means that the homeowner cannot afford their mortgage and are voluntarily giving their home back to the bank in exchange for wiping their debt clean. It does have a negative impact on credit scores, but sometimes it is the only option for some people.  It is quite possibly the fastest way that one can escape foreclosure.

To qualify, homeowners must be able to prove their hardships, such as the loss of a job, serious illness, or the death of a co-borrower. They must have a debt-to-income ratio of 55 percent or higher, and the property must be in good condition. This mortgage release option is best for those facing a hardship and will not be able to make their payments in the future. It is not expected than a large number of homeowners will suddenly apply for a deed-in-lieu of foreclosure though, especially since home prices are going up. It is up to each homeowner to decide if it is better for them to continue paying their mortgage for a few more years while home prices further improve, or take a hit to their credit now and move on.

If you find yourself unable to make your mortgage payments, be sure to carefully consider all of your options before making a decision. If you are unsure of what to do, we are willing to help assess your situation and answer your questions. Call us at 888-883-5252 for help.

The Future of Refinancing

How would you like to be among the millions of responsible homeowners who can refinance their mortgages at a lower rate in order to save thousands of dollars each year? It's within your reach!

Especially now that U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) have introduced this legislation in the 112th Congress. It is called "The Responsible Homeowner Refinancing Act of 2013" and it plans to remove the barriers that are currently preventing borrowers from obtaining the lowest rate possible.

This bill would streamline refinancing as we know it for all of Fannie Mae and Freddie Mac's borrowers whether they are underwater or not. Up-front fees would be reduced, appraisal costs for borrowers would be eliminated, and the HARP program would be extended by one year to allow eligible borrowers to take advantage of it.

This would be done at no cost to taxpayers. It is intended to stimulate the economy by lowering borrowers' monthly mortgage payments. This would hopefully reduce the number of foreclosures around the nation while boosting the housing market.

That’s why the Menendez-Boxer bill has such broad support from industry and consumer groups. With the recent record-low rates for a 30-year mortgage averaging around 3.53%, you could be one of the nearly 12 million homeowners guaranteed by Fannie Mae and Freddie Mac who could refinance! There are many who are not currently able to refinance because of policies and high fees, but if the Menendez-Boxer bill goes into effect, all that red tape would be gone!  In fact, through HARP, the average homeowner saves $2,500 per year as it currently is. The bill plans on increasing that amount by expanding refinancing opportunities for all those who are eligible.

If you are ready to take advantage of the current low rates, find out if you are qualified for a loan now! Call Quest Loans at 888-883-5252 to find out when it is the right time for you to refinance! We will answer all your questions!

Ready to Purchase Your Home?

At Quest Loans we are committed to obtaining the best loan programs and pricing for everyone from first time home buyers to experienced investors. Let us do the all legwork when it comes to researching the various loan programs available in today’s market. If you are looking to refinance or purchase a new property, let Quest Loans provide you with the Best Rates, Best Service, Period.

Contact us at 1-888-883-5252 to get started on your loan! Or you can email us at information@questloans.com if you have any questions!

What are the current rates?

According to Freddie Mac's Primary Mortgage Market Survey, mortgage rates have dropped even more! They are now at NEW all-time record lows. This includes all rates except for the 1-year ARM which didn't reach a new low.

• 30-year fixed-rate mortgages (FRM) are averaging at 3.87 percent. This time last year it was at 4.81 percent.
• The 15-year FRM averaged 3.14 percent which is down from 4.08 percent last year.
• The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.80 this week and was at 3.69 last year. 

Take advantage of these great rates today! Give Quest Loans a call at 1-888-888-2322 for more information so you can be that much closer to owning your own home!  You can also email us at information@questloans.com!

How Does Escrow Work?

Escrow
To finalize the sale of the home a neutral, third party (the escrow holder, a.k.a. escrow agent) is engaged to assure the transaction will close properly and on time. The escrow holder ensures that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being finalized, including receiving funds and documents, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you clear title to your property before the purchase price is fully paid.

The documentation the escrow holder may be collecting includes:

• Loan documents
• Tax statements
• Fire and other insurance policies
• Title insurance policies
• Terms of sale and any seller-assisted financing
• Requests for payment for various services to be paid out of escrow funds

Upon completion of all instructions of the escrow, closing can take place. All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then transferred to the seller and appropriate title insurance is issued as outlined in the escrow instructions.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. As your real estate agent, I'll inform you of the acceptable form.

The Escrow Holder Will: 

Definitions of Common Mortgage Terms

One issue commonly arises when first time home buyers begin their mortgage application process: understanding the definitions of various mortgage terms. If you are not familiar with the process or the industry, there is plenty of jargon that could slow down this process for you. We want you to fully understand these terms and how they apply to you and your future new home.

Definitions

Annual income
Your annual income before taxes. For married couples this is your total combined annual income before taxes.

Purchase price
The price of the home you wish to purchase. This is the actual price you'll pay, not including any closing costs.

Total monthly payment
Total monthly payment that you can qualify for. This is the total of principal, interest, taxes and insurance paid each month. Often called PITI.

Cash on hand
Cash you have for the down payment and all closing costs.

Interest rate
The current annual interest rate you can receive on your mortgage.

Reminders for Home-buyers

It is important to understand your personal financial situation before getting a mortgage. The amount of money a banker is willing to lend you might not be how much you can afford to borrow.

Make sure to learn the loan jargon before you start mortgage-shopping. It will make everything that much easier!

When choosing the best type of fixed-rate or adjustable-rate, decide how long you want to keep the loan and how much financial risk you can accept.

A good way to get the loan you want is to craft a positive and truthful mortgage application, just as you would prepare your resume to get the job you want.

If you already own a home, refinancing could save you money! Stay up to date with the current interest rates!

If you would like more information on getting your own mortgage application started, contact Felix Katz of Quest Loans at 805-456-1201. He would be happy to answer any questions you may have.

Understanding the Terms: "Lock" and "Float"

If I were considering financing or refinancing a home today, I would do the following: Lock if my closing was taking place within 7 days or Float if my closing was taking place between 8 and 60 days from now.

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers. Brought to you by the professionals at Quest Loans.

What does this mean?

Basically, a deposit is paid by a borrower to lock in an interest rate for a specific period of time while a mortgage application is being processed. If interest rates decline during this period, the float down option allows the borrower to obtain a lower rate.

For example, suppose a borrower locks in a rate of 5%. Before the borrower's mortgage application is complete, however, interest rates drop to 3.5%. If this borrower has a mortgage rate lock float down, they may lock in the lower mortgage rate before the mortgage is approved.

Welcome!

Welcome to 411 Rates, the place to get all the info you need about mortgages in a way you can understand it. We know that applying for a mortgage can be a daunting task. There is so much to know and the jargon can really make it confusing. Don't worry, you have come to the right place!

We would like to help you break down the entire loan process so that you aren't left scratching your head while you sign your name. It is important to know what you are agreeing to and how it will effect your life.

Please bookmark us and continue checking back for our frequent simple but informational posts regarding mortgages.