Sarasota Mortgage Rates | The Mortgage Skinny

If you’re having a tough time making your monthly mortgage payments then read the rest of this article and maybe you will be able to figure out how to make ends meet.  There are 6 different decisions you can make in order to make ends meet.  Some of them may be very difficult to make but in order for you to make the right decision you need to have no emotion.  I know it’s extremely tough to have no emotion when you’re deciding if you should keep your home or not but having no emotion will be better for you in the long run.  Below are the 6 decisions you may need to make:

1. Re-negotiate your monthly payment with the bank.  I’ve heard a number of people have tried to do this and have not succeeded, but more recenently banks are starting to open their ears.  I just heard a story about a CPA who was working out new monthly payments with his clients mortgage companies and coming up with great results.  Supposedly he helped lower his clients interest rate down to 2% which allowed his clients to keep their home. 

2. Refinance your loan.  If you are in a situation where you have a high monthly mortgage payment due to a high interest rate and you have enough equity left in your home to refinance, then I highly suggest this.  This may not be a choice for some homeowners because they are in a situation where they owe more on the home than it’s worth.

3. Sell and Cut your Losses.  A great way to get rid of your monthly payment is to sell your home and cut your losses.  If you have money in the bank to pay for these losses then this is an option.  If your home is worth more than what you owe on the home, then this is a great option as well.  This isn’t a great option if you owe more on the home than what it’s worth and you don’t have any money in the bank to pay for your losses.

4. Short Sale.  Short selling your home in today’s market is the best way to cut your losses if you can’t do any of the above.  A Short Sale consists of presenting your bank with a contract that is below market price and asking if they would be willing to accept the contract and close out your lien without putting a deficiency lien against you for the difference.  With the way the market is going, banks are more likely to accept a short sale.  A number of banks are dealing with a lot of foreclosures which consists of a lot of fees for a bank, so doing a short sale cuts out a lot of these fees.  More than likely if they don’t accept a short sale it will result in foreclosure which is extremely costly.

5. Foreclose.  Foreclosing on a property is probably the worst thing you can do.  But if you have no other option, then foreclosing is definitely a way out.  If you read my previous article about foreclosing than you know exactly why you shouldn’t.  Your credit score will go down, it costs the bank a lot of money, and the bank has 4 years to put a deficiency lien against you which may cause you to be in the same position years down the road. 

6. Bankruptcy.  Bankruptcy is not a bad decision if you have no other way out and there is no light at the end of the tunnel.  Filing a Chapter 7 Bankruptcy will wipe away all your debts and is basically be the end of the story.  In today’s world it’s tougher to qualify for bankruptcy, you either need to have an income below the median income or you need to be qualified as insolvent.  Either way, once you have qualified your creditors can no longer contact you and your assets will be divided between the creditors.  The creditors can not put any lien against you and you are officially working with a clean slate.  Only problem with this is your credit score drops dramatically and you’ll have a tougher time qualifying for credit cards, auto loans, and mortgages.

None of these decisions are something you want to make.  But depending on your situation it may be something you have to make.  As I’ve said before, I don’t reccomend you making a decision this big without first consulting an attorney or CPA. Every situation is different so contact someone who can review yours and help you make the right decision.

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I’m sure a number of you maybe visiting this website because you were wondering about Foreclosures and what the consequences may be.  I’m not an expert in Foreclosures but I have some information about some of the problems you may run into if you decide to foreclose.  Before you decide anything, please consult a lawyer or someone who specializes in foreclosures.  It is too big of a decision to make just by reading some blogs or some articles posted by authors who don’t know your situation.

The number one disclaimer I’ve heard from consumers and realtors I’ve been working with is do not foreclose.  It may sound great that you’re going to be getting rid of your debt and wiping yourself clean of the monthly payments of that investment home or primary home you once loved.  But it could end up costing you more in the end.  Banks are in a tough market right now especially with a number of their customers in default and with a large number of properties currently in foreclosure.  They’re doing whatever they can to prevent a customer from foreclosing.  It costs a bank quite a bit of money to foreclose.  Think about it…. obviously a bank is getting the home back because the customer couldn’t sell it in today’s market and couldn’t rent it out for a profit.  The bank then has to auction the property off, and a lot of times they don’t get what the customer owed.  So they’re taking a loss for that, and then they have to pay for all the lawyer fees.  It’s just a miserable situation, and the number one cause for these large banks to shut their doors.

 So as a consumer what is the big deal with letting the bank take the fall?  The big deal is that the bank then has four years to come back and hit you with a lien.  So for the first year or two you may think you’re smooth sailing, but in reality you have an addition two years to worry if you’re going to get hit with a deficiency lien.  In the long run you may be in the same situation as you were before, so make sure you think long and hard.  Like I said before, consult a lawyer who specializes in foreclosures because not all situations are the same.

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If you’re thinking of buying a home, now might be the right time! Interest rates have fallen below 6.00% to start the year in 2008 which is below 2007’s national average of 6.44%.  Mortgage rates have always been known to fluctuate but it seems as though 2008 is starting out strong.

The unexpected and steady decline in rates could help cushion the home sales for 2008 by making mortgage payments more affordable.  With the decline in home values, now is the time for first time homebuyers to purchase.  With an interest rate of 6.00% and a home valued at $150,000, a monthly mortgage payment would cost $899 for Principle and Interest.  Most renters can afford this and can now have the opportunity to own and not ever have to deal with landlords again.

With interest rates as low as they are today, it’s also giving current home owners a chance to refinance out of their current situations.  Many Americans are dealing with fluctuating ARMs (Adjustable Rate Mortgages) that are coming due and it’s causing their monthly payments to increase which then causes many to forclose.  Lower interest rates could not have come at a better time especially with the estimate of $1.2 trillion in ARM loans scheduled to reset to higher rates this year.

Lower interest rates help the economy, it gives first time homebuyers the opportunity to own, it gives current home owners the opportunity to refinance into better situations, and all of this causes more spending in the economy.   My advice would be to call your Mortgage Consultant and ask to get an annual mortgage check up.  If you’re not currently satisfied with your situation, then now is the time to make some changes and save! 

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What better way to start 2008 then with a post explaining another money saving tax break you receive with your mortgage. The Mortgage Forgiveness Debt Relief Act of 2007 will have wide ranging effects on many American’s pockets. The  law takes action on the deductibility of private mortgage insurance premiums and also to the capital gain taxes from sales of primary residences. If you experienced capital gains in in 2007, my hats off to you!

Let’s take a look at the private mortgage insurance premiums, PMI for short. Many Americans are paying PMI because their down payment was less than 20% of their home’s value when purchasing. These American’s can pay hundreds to thousands of dollars depending on their down payment amount and loan amount simply because their high loan to value is risky to banks. PMI was never attractive to home owners and was more of a damper adding yet another payment that did nothing to your mortgage’s principal. Instead of paying (PITI) Principal + Interest + Taxes + Insurance, there was another element to the payment that looked more like PITIPMI. Pretty Ugly if you ask me! The new deduction is available to families with an adjusted gross income of $100,000 or less. Home owners with incomes up to $109,000 get a partial deduction on average the tax break is worth about $350 a year.

A penny saved is a penny earned… The ugly PMI has just got prettier!

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Our posts have dwindled and we’ve slowly lost touch towards the end of 2007. Well I have good news for our followers and fellow mortgage bloggers… We’re back! One of our new years resolution for 2008 was to step up our game in the mortgage world and what better way than to give TheMortgageSkinny a face lift with a clean design and more content. We beleive 2008 will be a great year for mortgage transactions, the worst has come and gone.

So sit back, relax, and enjoy the knowledge!

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