With the recent upswing in the mortgage rates, the option of an ARM is starting to be explored a lot more with current borrowers. The mortgage rates recently spiked, going from 3.5% in April to over 4.5% as of now in late July which is having a significant impact on peoples' buying power. I know that a few of my clients just recently had to lower their price range by 10 to 20 thousand in order to adjust to the rates. At the same time the 30-year fixed rates are experiencing this small surge, ARMs have been keeping fairly steady, fluctuating between 2.7% and 3.1%. Yes, those rates look very appealing right now; but at what cost? For those of you who do not know what an ARM is, I will explain. ARM stands for "adjustable rate mortgage" which means exactly what is says; the rate is not locked in for the length of the mortgage and periodically adjusts according to an index that reflects the cost of the lender to borrowing on the credit markets. This closer focus by borrowers on ARMs is starting to get some people nervous, but why?
Well, ARMs are often accused of having a hand in causing the housing bubble. Their low rates and low initial payments are very appealing, HOWEVER that is not the whole picture. You are assuming a hefty risk when entering into an ARM and you need to be prepared for the future. Prior to the housing bubble many home buyers went with an ARM and once the higher reset payments went into effect many were forced to default on their loan. In recent years, fixed rate mortgages have reached record lows, staying steady at 3-3.5%. With rates like that in fixed rate mortgages, it didn't make sense to take on the risk of an ARM, but now with the recent spike, ARMs are back in the spotlight. Earlier this month, the share of ARM activity jumped to its highest level in 5 years (since July 2008, according to the mortgage bankers association.)
ARMs are based off short term interest rates which are still seeing numbers near record lows. Although, economists are expecting to see an increase in these short term rates fairly soon. Borrowers choosing an ARM will be able to purchase a more expensive home then if they were to go with a fixed rate mortgage, but at what cost? If the monthly payments rise to much because of the variable interest rates, it would be like digging yourself into a hole that you eventually cannot climb out of. The purpose of me writing this is not to scare you away from ARMs as it may be the right choice for you. Just keep yourself informed and make sure you consult with a mortgage expert before jumping into something you may not completely understand.
Showing posts with label default. Show all posts
Showing posts with label default. Show all posts
Tuesday, July 23, 2013
Thursday, July 18, 2013
Responding To Foreclosure Summons
Hey Everyone,
I would like to welcome a guest poster Stephen K. Hachey, a real estate lawyer located in Florida. I am always looking to keep my readers informed on every aspect in real estate and I felt that Stephen's professionalism and knowledge on pertinent real estate law topics would be very beneficial to my blog, enjoy the read everyone!
In 2012, nearly 2 million homes in the US were foreclosed on. Although this number has gone down compared to previous years, homeowners are still finding themselves being served with foreclosure summons.
If you’ve defaulted on your mortgage long enough, your mortgagor (or bank), will begin the law suit that the bank will file against you. This takes place roughly after 3 to 6 months of payments have been missed.
Each state has different foreclosure measures but all fall within two categories: Non-judicial foreclosure and judicial foreclosure. Non-judicial foreclosure does not require a court proceeding and takes less time than a judicial foreclosure, which involves a judgment for money owed by the borrower and in most cases, leads to the auction of the home.
Even though you may have defaulted on your mortgage, being served with a Notice of Intent does not necessarily mean you will lose your home. You can negotiate with the bank and work on a Short Sale, apply to modify your mortgage, or simply pay the loan up to its current dues.
In the event that alternative action cannot be taken, you have between 15 and 30 days, depending on your state, to file an answer with the court. The lender will make allegations in association with your default. The best way to delay the foreclosure process is to answer all allegations thoroughly. Statements that you accept will allow the lender no further action against that evidence. However, if you deny statements that are brought up in the summons, you must provide supportive information as to why you are denying them. This will force the lender to provide additional information against you, which in turn will give you more time before the auction of your property.
You may be able to fight the foreclosure in court. A commonly used defense is that the bank participated in unlawful practices in association with your mortgage payments. If you decide to contest the allegations that the bank brings to the attention of the court, you will delay the foreclosure. However, court costs and possible attorney costs will need to be paid and it does not guarantee that you will halt the foreclosure.
The Notice of Intent to Sell is the final attempt for the lender to collect the mortgage balance before the property is sold at auction. At this point, a judgment has already been made in favor of the lender. Failure to respond to the Notice of Intent to Sell will allow the property to go to auction.
The home is sold for the minimum price at auction. If the house does not sell, the bank becomes the owner by default. Then, the lender can take possession of the property and evict the resident. The entire process can take anywhere from 8 months to a year.
This post was written for Stay Real Estate by Stephen K Hachey. Stephen is a Florida real estate lawyer at http://floridarealestatelawyer.org/ specializing in loan modifications, short sales, foreclosure and much more. He is also the owner of his own practice, the Law Offices of Stephen Hachey, PA. This article is for general informational purposes only and does not establish an attorney-client relationship. Please contact a licensed attorney in your state of residence. For more information on our services, please visit our website at www.floridarealestatelawyer.org/.
I would like to welcome a guest poster Stephen K. Hachey, a real estate lawyer located in Florida. I am always looking to keep my readers informed on every aspect in real estate and I felt that Stephen's professionalism and knowledge on pertinent real estate law topics would be very beneficial to my blog, enjoy the read everyone!
In 2012, nearly 2 million homes in the US were foreclosed on. Although this number has gone down compared to previous years, homeowners are still finding themselves being served with foreclosure summons.
If you’ve defaulted on your mortgage long enough, your mortgagor (or bank), will begin the law suit that the bank will file against you. This takes place roughly after 3 to 6 months of payments have been missed.
Each state has different foreclosure measures but all fall within two categories: Non-judicial foreclosure and judicial foreclosure. Non-judicial foreclosure does not require a court proceeding and takes less time than a judicial foreclosure, which involves a judgment for money owed by the borrower and in most cases, leads to the auction of the home.
Even though you may have defaulted on your mortgage, being served with a Notice of Intent does not necessarily mean you will lose your home. You can negotiate with the bank and work on a Short Sale, apply to modify your mortgage, or simply pay the loan up to its current dues.
In the event that alternative action cannot be taken, you have between 15 and 30 days, depending on your state, to file an answer with the court. The lender will make allegations in association with your default. The best way to delay the foreclosure process is to answer all allegations thoroughly. Statements that you accept will allow the lender no further action against that evidence. However, if you deny statements that are brought up in the summons, you must provide supportive information as to why you are denying them. This will force the lender to provide additional information against you, which in turn will give you more time before the auction of your property.
You may be able to fight the foreclosure in court. A commonly used defense is that the bank participated in unlawful practices in association with your mortgage payments. If you decide to contest the allegations that the bank brings to the attention of the court, you will delay the foreclosure. However, court costs and possible attorney costs will need to be paid and it does not guarantee that you will halt the foreclosure.
The Notice of Intent to Sell is the final attempt for the lender to collect the mortgage balance before the property is sold at auction. At this point, a judgment has already been made in favor of the lender. Failure to respond to the Notice of Intent to Sell will allow the property to go to auction.
The home is sold for the minimum price at auction. If the house does not sell, the bank becomes the owner by default. Then, the lender can take possession of the property and evict the resident. The entire process can take anywhere from 8 months to a year.
This post was written for Stay Real Estate by Stephen K Hachey. Stephen is a Florida real estate lawyer at http://floridarealestatelawyer.org/ specializing in loan modifications, short sales, foreclosure and much more. He is also the owner of his own practice, the Law Offices of Stephen Hachey, PA. This article is for general informational purposes only and does not establish an attorney-client relationship. Please contact a licensed attorney in your state of residence. For more information on our services, please visit our website at www.floridarealestatelawyer.org/.
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