Life Insurance For Mortgages

The mortgage process can be a little confusing if you aren’t familiar with the terms used in the process. To help you out, here is a list of terms with corresponding mortgage definitions.

Broker: An independent mortgage professional that oversees the entire home loan process.

Lender: The business entity providing and funding the home loan.

Processor: Prepares your loan for underwriting. The processor makes certain your income is properly documented and verified, the appraisal is being performed, and title and escrow are opened.

Escrow: Works with title to certify payoff demands for all existing liens. Escrow is an independent group which disburses monies to all parties in the loan transaction and ensures full payment.

Title: Ensures both the borrower and the lender have a clean title on the home, guaranteeing to both parties there are no mistaken liens and that all existing liens on the home are scheduled to be paid and removed.

Underwriters: Make the decision to approve or deny the loan. Hired by the lender, their job is to review all aspects of the loan based on the lender’s approval guidelines.

Automated Underwriting: A computer generated loan approval. This automated process only takes minutes and is the quickest path to approval.

ARM: Adjustable Rate Mortgage. An ARM has a fixed rate for a specified amount of time. After the initial term, the loan becomes adjustable and the rate can fluctuate depending on market conditions. ARM payments are initially lower than fixed rate payments. This is an excellent option for people with damaged credit, those who plan to sell their homes short term or who simply want to save money on their monthly payment.

DTI: Debt to Income Ratio or your total monthly debt in relation to your gross monthly income. For example if you have $2,500 in total monthly debts with a total income of $5,000, your DTI is 50%. The higher the DTI, the higher the lender’s risk and 50% is typically the maximum allowable DTI.

Equity — The amount of vested or owned interest in your property. Subtract the total balance owed on the property from the appraised value to determine your equity.

FICO Scores: Most lenders use the FICO scoring system to qualify borrowers. The FICO score is a number assigned from each of the three main credit repositories (Experian, Trans-Union, and Equifax). This number is calculated based on your complete credit profile and takes into account late payments, balances on trade lines, inquiries for additional credit, judgments, bankruptcies, total debt, length of credit history, and more. The lower the FICO score, the higher the lender’s risk.

LTV: Loan to Value Ratio. For example: a loan amount of $75,000 on a home valued at $100,000 equals an LTV of 75%. Your equity would equal $25,000, or 25%. The higher the LTV ratio, the higher the lender’s risk.

Stated Income: Your own statement of income on the application versus income that can be independently verified. Use of stated income is an excellent option for self-employed individuals or those with hard to prove income.

Getting a mortgage for a home purchase can be stressful. If you understand the lingo being used, you will find it less so.

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.

A mortgage lead is information taken from a potential mortgage consumer. Many mortgage brokers use mortgage leads to have a better idea on what are the loan specifics their customers want.

The Internet has become a significant tool for both mortgage seekers and mortgage brokers alike. This is because the Internet serves as a portal for mortgage consumers and brokers to get information that are pertinent to mortgages. Online application for mortgages has become a trend. And each form that a borrower fills up will generate thousands of mortgage leads that mortgage brokers can use. These mortgage leads are available to you by a variety of online mortgage leads generators.

Ensuring quality in your mortgage leads

A high quality mortgage lead does not necessarily mean a mortgage lead that closes. Quality in mortgage leads is judged according to three criteria: freshness/novelty, accuracy, and truth.

As a general rule, the fresher the mortgage lead, the bigger your chances of closing that mortgage lead. At a minimum, a mortgage lead that is less than 48 years old is still considered quality mortgage lead. Anything more than that lessens your chances of closing the mortgage lead.

Accuracy in mortgage leads is important. Getting accurate data from users is one of the biggest challenges that mortgage lead generation companies face. Several software programs have been developed to ensure accuracy in mortgage leads. One of the more recent developments is a program that uses telephone/location verification.

The third criterion to consider when looking for quality mortgage leads is whether or not the mortgage lead is true. A mortgage lead is considered only true if that mortgage lead was actually generated by someone who is truly interested in getting a mortgage. This aspect of mortgage leads is very hard to determine but with a little research, you might just be able to pull it off. Some websites offer incentives for users who will fill out mortgage lead generation forms. To get a high quality mortgage lead, it is best if you stay away from these types of mortgage lead generation companies.

Mortgage Lead Expectations

Closing expectations of mortgage leads, especially those that are available over the Internet, are low. Closing mortgage leads at a rate of 8%-14% is already considered a good thing. Accurate data in Internet mortgage leads is only expected at 80%.

Closing Internet Mortgage Leads

As outlined earlier, closing mortgage leads depends on how quick you respond to a mortgage lead. The quicker you respond, the better your chances of closing a mortgage lead. The first thing you do when you get your mortgage lead is make contact with the one who generated that mortgage lead. Base the questions that you ask on the mortgage lead and obtain clarifications on what your client wants. Follow up your questions with quotes, again based on the mortgage lead generated, to keep your clients from dangling.

Mortgage Lead Companies

Below are three leading companies that sell mortgage leads to brokers.

Loanbright.com This company generates mortgage leads using their new, patent pending, mortgage industry specific Sales Force Automation tool called RMS.

Mortgage-X.com This is another company that provides lenders and brokers with high quality real-time mortgage leads.

Leads2Results This company offers mortgage leads that come directly from self-motivated applicants searching for mortgage loans.

Mias Calls On Mortgage Lenders To Fix Their Exit Fees

MIAS, the Mortgage and Insurance Advisory Services (http:www.mias-ltd.co.uk ), is concerned that, despite the recent publicity and various campaigns in the press, borrowers are still being stung by punitive exit fees.

Lenders charge exit fees when customers redeem their mortgage in full, for example, by switching their mortgage to a rival lender. Exit fees can also be termed administration charges, sealing fees or deeds-release fees and are raised to cover the cost of taking property deeds out of storage, sending them to a solicitor and producing a final account statement. Borrowers are warned when they sign up that if they switch lenders, theyll have to pay a fee but the size of that fee is not guaranteed to stay the same.

Within the last few years, lenders have increased their exit penalties steeply, with some now topping the 300 mark (http:www.mias-ltd.co.uknews-index.htm ). Firms have claimed that these hikes are necessary because of their increased costs and extra work, yet this justification appears hollow when one considers that property deeds are now held electronically at the Land Registry.

Alistair Good, Managing Director of MIAS said: One client, whose penalty had increased from 85 to 195 compared it with entering a car park where the prices were clearly displayed, only to find that they had more than doubled when it was time to pay.

He added: While we appreciate that lenders need to recoup the costs incurred when a mortgage is redeemed, borrowers need to be informed about these costs at the outset. If the fee is excessive, then the client can look elsewhere.

Although exit fees make up a tiny percentage of overall mortgage costs, it is unfair to hit a customer with an unexpected charge, which can reach 300. MIAS would like to see lenders state their exit fees clearly and fix them at the outset of deals. In this way, the client is treated fairly, in line with FSA guidelines.

One example is Northern Rock. Although they charge the relatively high fee of 250, they do commit to charge the fee stated when the client signs up for the mortgage. MIAS would like to see more lenders adopt this approach.
Commenting, Roger Milbourn, Director of MIAS, said: Exit fees, though unpopular with customers, are here to stay. But if lenders are to lose the tag of back door charging and reduce the flow of complaints to the Financial Ombudsman Service, they must be more transparent about these fees.

We see no good reason why the exit fee cannot be fixed for the life of a mortgage, so that the client would be aware of the charge from the start. Under the current system, exit fees can increase by more than 350% by the time the client comes to redeem his or her mortgage. This makes a mockery of the FSAs requirement to treat customers fairly despite their claims that they are not a pricing regulator.

In the absence of fixed exit fees, it is imperative for mortgage brokers to go through closing charges carefully with the client. The adviser should explain that the borrower may incur a punitive charge if they switch lenders or pay off their mortgage early (http:www.mias-ltd.co.ukfaqs.htm ) and in this way, broker and client can compare products fairly.

For further information, please contact:

MIAS Ltd
0845 833 0878
Managing Director: Alistair Good
alistair@mias-ltd.co.uk

Director: Roger Milbourn
roger@mias-ltd.co.uk

Notes to Editor:

The Mortgage and Insurance Advisory Service (MIAS Ltd) is a firm of impartial mortgage advisers, offering a comprehensive service to clients seeking residential and commercial mortgages and mortgage protection.

Founded in 2002, MIAS has quickly gained a reputation for providing straightforward, impartial mortgage advice, matching clients up with some of the most competitive deals around. MIASs experienced brokers have expertise in all sectors of the mortgage market and look after the whole transaction from beginning to end, making the process as smooth and as headache-free as possible.

For further information on the services MIAS offers, please visit http:www.mias-ltd.co.uk