How to avoid foreclosure?

Foreclosure is the worst nightmare for a home owner. IF you are stuck in a foreclosure mess, you can avoid it or you can prevent the worst happening. There are some steps which can help you during a foreclosure.

• Most important step to take is to contact your lender. Make your lender aware of your situation. Don't neglect the problem. The more you avoid, the worst it will get. Your lender don't want your home, they just need their money so they can help you out with financing options.

• You should understand your rights during this situation and what your lender can do. You should read all the mortgage conditions properly and can also contact state government office for further information as different states have different laws. Learn as much as you can about foreclosure prevention. You can also contact lawyers for further help.
  

• You can contact HUD approved counselors for help. They are experienced government officials who can help you out in understanding the laws in your state and and will help you in recognizing available options. They can also deal with the lender if you need help.

• Spend your money wisely. You should avoid spending money on unnecessary things. Your main priority should be paying your mortgage payments. You should also use your assets wisely. You should understand what you can sell to raise your cash.
  

Common myths of FHA loans

Myth # 1 - Government loans the money

Most common myth about FHA loan is that the loan is provided by the Federal Housing Administration (FHA) which is not the case. Government only guarantees for your loan and because of this guarantee, these loans are less riskier for the lenders or banks.

Myth # 2 - FHA loan takes longer to get approved

FHA home loans take no longer than other conventional home loans if you are properly guided by FHA loan officer who understands FHA mortgages completely.

Myth # 3 - Credit Score doesn't matter

This is neither completely true neither completely false. You must have a strong credit history for the past 12 months or so. You should have made all your payments on time without any delay. FHA may also look at your phone bills, rent and other bills to know credit worthiness.

Advantages of FHA refinance

• FHA refinancing can assist you with the funds or money you need to make necessary repairs in your home. With the funds, you can also expand your home and can also renovate it.

• You can lower the interest rate of the loan by refinancing the mortgage with a lower interest rate program.

• As the interest rates are lowered, so are your monthly payments and you can save significant amount of money.

• You can adjust the time period of the loan by refinancing. You can increase the period of the loan or can also decrease the period of the loan.

• FHA refinancing don't need any extra amount or cash. And, if the refinancing doesn't cost you anyhting then you can save a lot amount of money.
  

Things you should consider before applying for Reverse Mortgage

As you all know, Reverse Mortgage is a loan provided to senior citizens against their residential property and the home equity is converted into the cash. But before applying for FHA insured Reverse Mortgage you must consider the following points:

• First of all, you should go for a counselling. It acts as consumer protection and requires a third party to understand the program completely. You can contact local HUD-approved counselling agencies or national agencies and can be done on phone or face to face.

• You should consider for other options apart from a Reverse Mortgage. Because these loans are costly, and if you intend to leave the home in few years then it is advisable not to go for a Reverse Mortgage.

• Usually Reverse Mortgage does not affect your social security benefits. But, the fund you receive must be used in the same calender month only. If you retain the funds then it will counted as assets and can affect your Medicaid and social security benefits.

• You can apply for Reverse Mortgage even if you already have a mortgage but the money you recieve should be used to pay off the mortgage first as Reverse Mortgage must be in first lien position.
  

Documentation for a FHA loan

Your FHA loan completely depends on your documentation. If you provide complete and right documents about yourself then your FHA loan is approved quickly and also you don't face any problems in future. Your documents must include:

Employment Information: this will include your 2 years of tax returns and if self-employed than you need to provide 3 years of tax returns with profit and loss statement.

Saving Information: Complete bank statements for 2 months for all your accounts and also recent statements about your stocks, mutual funds etc.

Credit Information: most recent bill statements with minimum payment information and also account number. Complete information about your landlord. If you have zero credit than most recent electricity bill, phone bills or any other loan statements.

Personal Information: Driving license, social security card, if you are applicable than green card and also your work permit.

If you own a home or making a FHA refinance than provide documents of property tax bills, homeowners insurance policy, complete information about current loan. These are the necessary documents you will need for a FHA insured mortgage. Other documents may be asked after your FHA loan file is processed.

Reverse Mortgages

Reverse Mortgage is a loan available to senior citizens who are above 62 years of age and owns a home with home equity. This home equity is released as one lump sum amount or multiple payments according to the borrower's choice.

Reverse Mortgages are really beneficial as it provides financial stability to senior citizens. The loan is paid back when the home is sold, the owner dies or the owner moves away. To qualify for the loan, there is no minimum income or credit required but you must qualify on other factors. Amount of money that can be borrowed depends on the following factors.

• Age of the borrower (older the senior, the more money he/she can borrow)
• Interest rate
• Appraised value of the home.

All these factors together determine the amount of money that can be borrowed by the seniors. Before applying for the loan you can consult FHA or HUD as they can provide you with proper guidance.