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What to Do When Your Mortgage Lender No Longer Exists

So you’ve paid your mortgage on time every month and have always made sure that you review your yearly mortgage summary from your lender. You stay on top of things and have developed a good working relationship with your lender, even though they may be thousands of miles away. Then one day you wake up to find out that your mortgage lender has been bought or sold, or even worse they have went bankrupt and just closed up shop! Now what do you do and how does this affect your mortgage?

There is an old saying that nothing is as certain as change. It’s certainly true in modern markets where interest rates can change on a daily basis. When a mortgage lender goes out of business, for whatever reason, there are typically a lot of questions from those who are used to sending in their payments every month. The very first question is “How does this affect me?” – The good news is that in every case your mortgage rates, payments and other terms will not change. The only thing that is likely to change is the address to where you send the payments, and even then that might stay the same!

Mortgage lenders routinely buy and sell mortgage notes on the open market. In fact there are mortgage lenders out there who write mortgages for the sole purpose of selling them in the secondary mortgage market. In years gone by when you took out a mortgage from your local bank it stayed with the bank through the entire life of the mortgage. Today, typically a mortgage will be sold an average of 1.5 times and rarely does it stay with the original lender unless they were one of the larger mortgage underwriters.

When a mortgage company ceases operation that does not mean that the mortgages they wrote no longer exist. They are considered assets of the company and are sold on the open market typically to the highest bidder. No matter how much they pay for the mortgage your rates, terms and amount due each month does not change.

The general rule of thumb is to always mail your payments in to the same address you have been mailing them until you hear from the new mortgage servicer directly. If you have automatic withdrawals from your checking or savings account you may not have to worry about doing anything – the withdrawal may change automatically.

Above all, do not stop sending your payment in or “wait until you hear from the new company”. This will have a negative effect on your credit and you could find yourself heading down the road of foreclosure. Banks, lenders and other underwriters have well established procedures in place for buying and selling existing mortgage notes. In the end the only thing you have to worry about is making sure you continue to make your payments on time every month!

A reverse mortgage is a special type of loan that home owners can sometimes get to convert the equity in their homes to cash. Simply, a reverse mortgage is a type of loan that provides you with a monthly income, a lump sum of cash, or a line of credit. Or a combination of both

This was originally structured for retirees keen in keeping their homes but whose incomes aren’t sufficient to support them, reverse mortgages have typically been used to help people on low incomes to pay for daily expenses, huge medical bills or the odd house maintenance and repair costs. Reverse mortgage also pays off your existing loan, if you have any. So you have no ongoing house payment. The monthly income you receive from the reverse mortgage is guaranteed and you will receive it as long as you remain living in the home.

Many reverse mortgages offer special appeal to older adults because the loan advances, which are not taxable, generally do not affect Social Security or Medicare benefits. Another advantage of reverse mortgages is the different withdrawal options that you are able to choose. These options include lump sum distributions, line of credit, monthly payments, or any combination of these three. So if you were eligible to borrow 200,000 on a reverse mortgage you could select to receive 60,000 up front to cover current expenses, and hold the rest as a line of credit that you can use whenever you need it. This flexibility of reverse mortgages can significantly improve you financial independence during retirement

The disadvantage is the relative cost of a reverse mortgage. Reverse mortgages tend to be very expensive when compared with a conventional mortgage. This is due to the rising-debt nature of reverse mortgages. Another disadvantage is the reverse mortgage payments can affect eligibility for old age pensions, or supplemental Social Security income. Senior citizens may not even appreciate this problem until after they already have their reverse mortgage, and only then do they discover that this can have the negative affect on their finances then what they were trying to accomplish in the first place by taking out the reverse mortgage.

With these facts in mind, reverse mortgage are definitely an option to consider if you are looking for ways to supplement your current income. As with any financial decision, you should consult the advice of a trained financial professional to analyze and determine if a reverse mortgage is right for in your unique circumstances. For calculation, please visit
mortgage-query.commortgage-calculatorscalculators.phpOnline Mortgage Calculators to help you decide better.

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Creating and maintaining wealth is a very difficult task. Ask any millionaire!!! The delicate balance of living a dream lifestyle and holding expenses tight creates this difficulty. As a financial advisor, I have assisted people accumulate monies to live their dream life while discovering ways to reduce their necessary expenses. Everyone would agree mortgages are necessary expenses. Probably the biggest expense most of us have. Mortgages present the opportunity to secure income tax deductions while utilizing the house to live. What if you could reduce your mortgage interest rate to 3% and be required to pay interest only for 5 years? Would you refinance your current house? Purchase another? While refinancing a clients mortgage, I discovered such a mortgage. The client will save lots of money the next few years. Here is his scenario:

Client #1 500,000 Loan Amount
Current
30 Year Fixed @ 6.00%=P&I 2,997.75 month
5th year loan balance 456,989.77
Equity (assuming no appreciation) 43,010.23

Past
LIBOR ARM @ 3.00%=Interest only 1,250.00 month
Applied additional 1747.75 month to principal for 5 years
5th year loan balance 362,370.82
Equity (assuming no appreciation) 137,629.18

Creating and maintaining wealth is a very difficult task. Ask any millionaire!!! The delicate balance of living a dream lifestyle and holding expenses tight creates this difficulty. As a financial advisor, I have assisted people accumulate monies to live their dream life while discovering ways to reduce their necessary expenses. Everyone would agree mortgages are necessary expenses. Probably the biggest expense most of us have. Mortgages present the opportunity to secure income tax deductions while utilizing the house to live. What if you could reduce your mortgage interest rate to 3% and be required to pay interest only for 5 years? Would you refinance your current house? Purchase another? While refinancing a clients mortgage, I discovered such a mortgage. The client will save lots of money the next few years. Here is his scenario:

Client #1 500,000 Loan Amount
Current
30 Year Fixed @ 6.00%=P&I 2,997.75 month
5th year loan balance 456,989.77
Equity (assuming no appreciation) 43,010.23

Past
LIBOR ARM @ 3.00%=Interest only 1,250.00 month
Applied additional 1747.75 month to principal for 5 years
5th year loan balance 362,370.82
Equity (assuming no appreciation) 137,629.18

Client #21.2 Million Loan Amount
Current
525 ARM @4.25%=P&I 5,903.28 month
5th year loan balance 1,064,681.48
Equity (assuming no appreciation) 135,318.35

Proposed
LIBOR ARM @3.00%=Interest Only 3,000 month
Applied additional 2903.20 month to principal for 5 years
5th year loan balance 971,261.81
Equity (assuming no appreciation) 228,738.19

You can see from these scenarios this mortgage can be a great tool to reduce your monthly mortgage payment or to shave down the loan balance thereby increasing your equity. This mortgage interest program is termed negative amortization. Rather than paying off the interest over the time period, you are paying of a small portion of the interest but not the required amount. Interest rates can go as low as 1.25%. If you want savings refinance your mortgage.

When refinancing a mortgage loan, homeowners have several options. There are numerous reasons for refinancing an existing mortgage. The past five years have witnessed low mortgage rates. However, low rates will not remain forever.

Before interest rates begin to climb, homeowners should take advantage of their refinancing option.

Which Home Mortgage Lender to Choose?

Many financial lending institutions offer mortgage refinancing. If hoping to secure a good refi loan, it may be practical to use a refinancing specialist. Mortgage specialists are able to address all your concerns. Moreover, they can offer expert advice on which type of mortgage refinancing to choose.

Homeowners who are satisfied with their existing mortgage lender may consider obtaining a new mortgage with the same lender. However, using the same lender is not required. In fact, even if your mortgage lenders offer a good refi loan rate, it helps to obtain additional quotes and compare the different offers.

What are Your Refi Loan Options?

When refinancing a mortgage loan, homeowners have several loan options. Usually, homeowners refinance to lock in a low fixed rate. This way, mortgage payments remain predictable. Many select adjustable rate mortgages below of their low introductory rate. If homeowners choose a mortgage loan with an adjustable rate (ARM), they should anticipate changing rates. If rates falls, ARM’s pose little threat. However, if rates increase, so does the mortgage payment.

Homeowners should also select an ideal term when refinancing a mortgage loan. For example, will they extend the loan term by refinancing for another 30 years, or choose a shorter term and refinance for 15 years.

Cash-out Refinancing Loan Options

Because the average consumer debt is approximately $8,000, excluding auto loans and student loans, many homeowners choose refinancing as a method of reducing their debts. Cash-out refinancing, which entails borrowing from your home’s equity, is perfect for consolidating debts and financing other large expenses such as home improvements.

Before applying for a refinancing, homeowners should do their research and familiarize themselves with the refi process. For example, refinancing involves paying closing fees. Thus, homeowners ought to have a cash reserve or select a mortgage loan that includes the option of wrapping the closing fees into the principle balance.