Mortgage Payments
Mortgage Rescue Scams Are On The Rise
One type of mortgage rescue scam involves a predatory real estate investor stealing the equity a victim has built up in their home. Typically, the scammer will tell the victim they want to help save the home from foreclosure. This real estate investor will tell the victim he or she will buy the house personally, or will arrange to have another investor purchase the house.
The scammer promises to lease the house back to the victim for a period of 12 to 24 months to allow the victim to recover financially, repair their credit, find a better job, etc. They say that after the victim is economically healthy they will sell the house back at the end of the lease.
The real estate investor will often also attempt to sell credit repair services, mortgage broker services, and job placement services to the victim as part of the scam. Eventually, the scammer will force the victim out of their home and then sell the house, keeping the equity for themselves.
Government officials are seeing more of this type of criminal scam as mortgage rates increase and increasing numbers of homeowners are facing higher mortgage payments.
The scammers often use company names reflective of church affiliations. Often they use connections through social organizations or churches to meet victims.
Another type of mortgage rescue scam is a lease back transaction built on a series of lies. The scammer has no intention that the victim will be able to avoid losing the home. The scammer leases the house back to the victim with lease payments as high, or higher than the mortgage payments the victim was failing to make in the first place.
The scammer will often fail to provide the promised credit repair services, mortgage broker services, or job placement services that would be needed to put the victim in a position to repurchase the property at the end of the lease. As soon as a lease payment is missed the scammer will move to have the homeowner evicted.
Once the homeowner is evicted, the scammer will sell the house, pay off the underlying mortgage, and keep the equity. The victim end up with ruined credit and any mortgage obligations not satisfied by the sale of the home in the scam transaction.
There are many other variations on this scam. Sometimes the scammer will purchase the house from the victim below market price. The loan application may claim that the scammer intends to occupy the house when, in fact, there is already an agreement to lease the house back to the seller which is not disclosed to the lender. This lie helps insure that the loan will be approved and will give the scammer a better interest rate on the mortgage than if it had been an investment loan.
Sometimes the scammer will use an investor to purchase the house with a mortgage loan at below market value. The investor, who is often another victim, will then immediately quit claim the house to the scammer, often for a fee being paid by the scammer. The investors loan application will often claim the property is to be owner occupied when there is a lease agreement already in place with the seller. The existence of the lease will not be disclosed to the lender.
Scammers find vulnerable people through marketing, public records, or personal networks. Marketing includes direct mailings, radio and TV ads, or simpler approaches such as posting fliers. Public records may be found at county recorders offices where notices of trustee sales are available to the public.
Personal networks often include churches or community organizations. Professional networks can be used to locate victims when the scammer is also a real estate agent, mortgage broker, loan officer, attorney, or appraiser with inside information about the victims vulnerable financial position and pending foreclosure.
If you know people involved in these types of scams, call the Department of Financial Institutions Enforcement Unit with details.
Mortgage Length Calculating Which Is Best
For many people, purchasing a home is one of the largest and most important investments they will make after their education. It is important to make sure you choose the right mortgage, one you will be able to pay off within a reasonable amount of time. You also want to make sure you choose a mortgage which has the right length of time.
The length of your mortgage should depend on your financial circumstances. It should also depend on your future goals. How much can you afford to pay each month on a mortgage while still maintaining a healthy amount of savings? Being able to save a reasonable amount of money each month will protect you in the event of an emergency. You will also want to save money for the education of your children and your retirement. These are things you will want to take into consideration when choosing the length of your mortgage.
Common Mortgage Terms
Most mortgages have a length of 15 or 30 years. While some companies do offer 20 year mortgages, the interest rates for 15 and 30 year mortgages are fixed. Because of this they are used more often than mortgages which last 20 years. If you choose to take a 15 year mortgage, your monthly payments will be much higher. This will mean that you will have less income available to save. A 30 year mortgage will give you lower monthly payments, and will allow you to save more money than you would save with a shorter mortgage.
Weighing Up Your Options
It is important to weigh the advantages and disadvantages of both options before making a decision. Long term loans will give your more disposable income to spend on whatever you wish. They are flexible, and will also allow you to invest money. You can pay more money on the mortgage when you have it available so that the total amount can be reduced. You are also given tax benefits by the government because you are paying interest for a long period of time. These loans are also the easiest to be approved for.
Getting A Cheaper Rate
At the same time, long term mortgages also have higher interest rates. Because you are paying a large amount on the interest, you will pay more money in the long term. It also takes a long time to build up equity in the home. Long term loans also require long term commitments. You will want to make sure you have stable employment.
How To Pay Less For Your Loan
Short term mortgages are able to be paid off much faster. They have much lower interest rates and equity can be built up very quickly. Because the interest rate is low you will pay less over the long term when compared to a long term mortgage. At the same time, your purchasing power will be low and you will not have many tax benefits. Short term mortgage loans are also hard to get approved for. These loans tend to have higher monthly payments.
Whether you decide to get a short term loan or a long term one, you will be able to refinance to change the length of the mortgage. If you decide a few years after setting up a 30 year mortgage that you earn enough to pay it off much faster, you can refinance the mortgage for a shorter length of time. If you have a short term loan and it is difficult to make the monthly payments, you can refinance it to a 30 year mortgage.
Choose the Best Deal
The most important thing is to sit down and figure out which option suits you best. You should look at your current income, how stable it is, and how much you will have left over after paying the mortgage every month. You should choose a home which evenly matches your level of income.