Thinking about a second mortgage before divorce? Here are some things you may want to know. Mortgages and loans can be tricky and have many factors when going through divorce. Why do lenders want to know the details of your divorce? Because everything can change after the divorce and these changes determine when and how they collect on the loans and mortgages.

The details listed below are items lenders want to know: Alimony and child support: One spouse may be paying alimony or child support. This can affect monthly debts for the spouse paying and may determine how much they can afford to pay on the loan. Division of Assets: Most divorce settlements require a division of assets such as a savings account. If a lender requires reserves or available cash funds to apply for the loan, this may actually affect qualifying for a loan. The final divorce decree: This may require that the property be sold as a part of the division of assets. Lenders do not want to lend money to properties that will soon go on the market after the divorce because they do not make money on the property until several months after the loan closes.  Divorces can cause the spouse to buy out the property from the other spouse in the separation of assets. Did you have to purchase the home from your ex-spouse?Once you have filed for divorce and the papers are already in process, this does not stop you from getting a loan, but many factors might come into play as the divorce papers might be drastically altered after the divorce proceedings. This can then change the terms of the loan.

If you need to refinance on your mortgage, but paperwork has not been filled out and you need to refinance to get the cash to buy out the other spouse, you’ll want to apply and close you loan before you file your divorce paperwork with the county’s records office. This is due to the fact that once the divorce is final; the paper work may have changed.

In the beginning of the proceedings, the initial divorce papers write out the separation of property and child/spousal support. This document is not binding. Any decision made in these papers can be altered before the divorce is finalized by both spouses and/or by a judge. The lender requires the final decree then signed by the judge to validate information on the original loan application.

Now if both spouses are on the property loan, but one will keep the property after the divorce is final, then the person leaving the property would sign a quit claim releasing any ownership interest.

If the loan is not refinanced under the single owner’s name, then the ex-spouse is still on the loan and can still be liable for payments- even if they have no ownership interest. The debt will still be on the spouses’ credit reports and may possibly be a determination when going to buy a new home and applying for a new loan.

If the spouse who still owns the old home defaults on the loan, the other is still responsible for payments and must take precautionary measures because this affects their credit too.

If the ex-spouses name is removed from the title it cannot be removed from the mortgage loan papers. Lenders do not allow anyone to be removed from a loan to protect their investment. Anyone can be added to a loan.

To purchase a new home after the divorce, the ex-spouse will have to prove and document they make enough income to qualify not only for new loan but be able to pay the mortgage on the old home as well.

All this can affect your credit and qualifying for new loans.

By: Deborah E Smith

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When applying for mortgages borrowers have the choice of obtaining interest only or repayment mortgages.

Interest only mortgages require the borrower to only pay the interest charged each month on the mortgage. The balance of the mortgage remains the same throughout the entire term of the loan.

With repayment mortgages, the monthly payments to the lender comprise an element of interest charged and an element of capital repayment. As long as all the repayments are made on time, repayment mortgages are guaranteed to be repaid at the end of the term.

Repayment mortgages are also known as “capital and interest mortgages” because the capital balance is repaid along with the interest payments.

During the term of repayment mortgages the monthly payments made to the lender comprise both an interest portion and a capital repayment portion. At the beginning of the term of the mortgage the interest portion is high and the capital portion low.

Over time the interest portion diminishes and the amount of capital repaid increases. At the end of the term of repayment mortgages, the capital portion should be fully repaid.

Repayment mortgages are less risky than interest only mortgages because there will be no outstanding balance at the end of the term. Borrowers will therefore not be required to establish a separate Capital Repayment Vehicle (CRV) such as an endowment policy.

Home owners with repayment mortgages are also less likely to suffer from negative equity because they will be constantly decreasing the capital portion of their loan.

Regardless of the reduced risk, borrowers of repayment mortgages should take out decreasing term assurance policies. This type of assurance policy reduces the sum assured roughly in line with the reducing mortgage balance. This will insure that the balance of the loan is repaid upon death of the borrower.

By selecting the right type of assurance policy, the borrower will insure that the balance of the mortgage is paid off in full either when the term of the mortgage expires or upon death if they die during the term of the loan.

Repayment mortgages therefore have both advantages and disadvantages and borrowers should be well informed of both before applying. Independent mortgage advisers can help borrowers who cannot decide whether to apply for interest only or repayment mortgages by providing expert and impartial advice.

By: Michael Sterios

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Reverse mortgage rates are not different form traditional mortgage rates, and when you are applying for a reverse mortgage you should make every effort to find the lowest reverse mortgage rates you possibly can. While comparison shopping takes time, you can help your own cause by taking advantage of the reverse mortgage calculators available on one of the many reversed mortgage Internet websites.

You will have to pay interest on your reverse mortgage loan regardless of whether you receive your money as a single lump sum, in monthly installments, or as advances on a credit line. In the US, reverse mortgage rates are tied to the US Treasury rate, and like all adjustable mortgages rates will fluctuate as it does.

The Margin Is The Difference

Because of this, any money you save on your reverse mortgage rates will be as a result of the competition among lenders. Their margin–the amount they charge in interest over and above the variable treasury-based reverse mortgage rate, will vary from company to company. Lenders can adjust their rates anywhere from once a month to once a year.

Fixed-Rate Reverse Mortgages

Fixed–rate reverse mortgages are the exception to the rule, although they have become more available in recent months. One limitation on a fixed-rate reverse mortgage is that the borrower must take his or her money in a single payment; monthly installments and lines of credit are not permitted. Fixed reverse mortgage rates, in early 2007, were hovering in the low end of the six percent range, not including the lenders’ margins.

Your fixed mortgage rate will have nothing to do with your credit history or your income. Even low-income senior citizens who have paid for their homes are eligible for reverse mortgages; they, in fact, are the individuals for whom reverse mortgages are primarily intended.

You can get a better idea of reverse mortgage rates by researching both online and brick-and-mortar reverse mortgage brokers; many brokers have both websites and offices. Find the best online rate you can, then take it to the reverse mortgage lenders in your area and use it as a negotiating tool if necessary.

You can find a list of legitimate reverse mortgage lenders close to you by doing a search on the National Reverse Mortgage Lenders Association—NRMLA–website, searching by the name of the state in which you live, and then whittling down the results to lenders in your area. All NRMLA lenders are committed to upholding a Code of Conduct, which means they will deal with you fairly in the reverse mortgage process.

By: Wade Robins

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Mortgages

With the country in the grip of a credit crunch, homeowners face a tense time as the housing market faces an uncertain future.

As the housing market continues to stutter, and with the introduction of Home Information Packs (HIPS) brings more uncertainty upon the market.

The credit crunch which began in the US caused a ripple effect in the world markets, affecting economies around the world.

But what effects could the current crisis have on your mortgage in 2008?

The main worry is that if mortgage customers find it hard to get approved for loans, houses will become more difficult to sell, which could lead to a fall in prices.

Poor lending decisions in the US, coupled with above-average defaults, have meant that banks that have bought loans in packages – a process known as securitisation – have become nervous about lending due to uncertainty over the quality of the loans they purchased.

As a result, the supply of money for advancing home loans to individual customers is drying up, with the whole credit system threatening to grind to a halt – with banks facing a funding shortfall of around £30 billion.

The Bank of England and other central banks around the world have poured billions into the money markets in an attempt to help ease the credit crisis. But it remains to be seen if the injection of money into the system will help get the system working again, and bring security to world economies.

Lenders will be anxious to preserve margins, and if lending amongst companies remains tight, savers could face higher interest rates and more expensive mortgages as lenders try to balance their books.

According to a major UK building society, house prices fell at their fastest pace in 12 years, which could mean good news for potential buyers – provided they can get funding – but bad news for sellers. A recent survey carried out by a leading property website revealed that asking prices have fallen by around 3.2% since November.

New borrowers who have less than perfect credit scores may find it impossible to borrow at all, next year is predicted to be a bumpy ride for potential house-buyers.

Cut-price two-year fixed-rate home loans could be phased out, meaning mortgage borrowers who can’t find cheaper deals elsewhere face being forced onto more expensive standard variable rate mortgage plans.

As lenders are tightening criteria on mortgages, some experts believe fixed rates may fall in the New Year.

By: David Collins

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