Dc Fawcett Review – What is a second mortgage? What to know about it !!
There are chances that you may not know about second mortgages. Well, Dc Fawcett says that it is as simple as the reason that you don’t desire to have cognizance about it in the sense that expending for a first mortgage itself Is something not considered good.
Well, now let’s get into the fundamentals of a second mortgage. It is actually a second mortgage on your current Real Estate property. When you are contemplating on this option you are borrowing a sum by considering your property’s equity akin to a collateral. To put it in a nutshell, the homeowner will have an increase in his total debt. This can pave way to several financial blocks in instances when the homeowner will have problems that hinders him paying back his debts.
DC Fawcett Real Estate
– What are the different types of second mortgages?
Home Equity Loans
This type of second mortgage will provide you with the chance of obtaining a huge amount which is considered as a loan; this is regarded in terms of your property’s equity. Paying on an installment basis which is spread over a fixed span is the key here.
Home Equity Line of Credit
This type of second mortgage functions similar to a credit card. Here then you are provided with a credit limit that you can use it again and again given that you consistently pay the remaining amount.
What is the need for individuals to go for real estate second mortgages?
Accorrding to Dc Fawcett ,The answer to this zeroes down to the reason that people are in requirement of a lot of money; this may not be possible through other means.
When you are using a second mortgage then it implies that you have to expend on another expenditure on a monthly basis. You have to make it certain that you are in a position to take care of your monthly expenditures prior to handling any new payment onus. The key is that you can consult a mortgage specialist to know whether this is the appropriate option for you.
Pros of second mortgages
•In this method you can borrow a huge sum of money. Having said that, the amount that you can borrow is determined by the nature of the lender’s terms.
•Generally, second mortgages contain relatively low interest rates.
•Under some instances there will be the provision of deduction for the interest that you are paying on this type of mortgage. However, you have to consult the person who handles your tax prior to making use of the deductions.
Cons of second mortgages
• There is an impending risk of foreclosure as far as second mortgage is concerned. If you miss out on the payments your lender will consider your property for foreclosure. This will put you in a huge crisis. In this regard it is not wise to consider a second mortgage for day-to-day living expenditures.
• These mortgages can be costly. You have to expend on several things including appraisals, credit examinations etc.
• Whatever the time of borrowing you have to expend on interest. These mortgages can be lesser than the interest rates of credit cards but they are generally quite greater than the interest rate of the initial loan.
• As far as second mortgages are concerned though you are generally provided with a lower interest rate you are going from unsecured loans to one that could take away your property.
When you are contemplating over getting a second mortgage, it’s wise to consult a loan officer. Having said that, borrowing a huge sum is not advisable. Also remember that this mortgage is a fresh debt that should be paid back. The key is that you should not bring out a new problem through a second mortgage.
We all are aware of the term mortgage; let’s have a look at the word overlay and what logic it makes in the home loan context. In a nutshell, it refers to the mortgage approval standards that lenders and investor place on top of the guiding principle set by the Federal Housing Administration and the Department of Veterans Affairs. Dc fawcett says, As a matter of fact, mortgage overlays are determined by the lender’s capability to handle risk aligned with the current economic conditions. To be even simpler, depending on the economic state of affairs, the overlays can get tougher with inflexible economic times and flexible with prosperous times.
Dc Fawcett Reviews – How does mortgage works?
Sometimes, in fact, most of the times, Mortgage rules are bound to have some additional regulations tagged to it, to have a clear picture of why lenders append additional rules, it is imperative to be aware of the basic idea of how mortgage functions on the big scale.
For mortgage loans, lenders such as mortgage brokers, credit unions, and all local banks receive applications from consumers and compared it to several loans offered by FHA, VA, USDA, Fannie Mae and Freddie Mac. When this process is done, the lender will come to a conclusion as of which is the best loan for the consumer and process it, thereby approving and finalizing the same. Subsequent to this action, the lender vends the mortgage to another lender, where they will take a set of similar loans, such as several Fannie Mae loans, and sell them as investments, in simple, you will get a loan in one bank and receive a letter stating make all future payments to another bank later.
By this means, the smaller lender is set free from their money to make more loans. Lenders recognize that if they have a mortgage that has met all the guiding principle for an FHA mortgage, then that loan should be easy to put up for sale to another bigger lender.
DC Fawcett Tips – How to get rid of mortgage overlays and get a Loan and keep away from troubles?
By now you might be a bit perplexed and think how to get a mortgage and keep away from all such issues. Don’t fret! This is for you. With all of this information about the threat and extra charge for various situations, the way out to this is simple but not easy.
To meet the criteria for a mortgage is very simple; get your full financial plans right, meaning make sure that you are:
- Paying your accounts on time
- Keeping your job for at least 2 years
- Have a variety of credit accounts and
- Keep your overall debt low.
If you are making an effort for the aforesaid things, and can accomplish these besides saving up a decent down payment, you will be well on your way to meet the requirements for the home of your dreams.
Dc Fawcett Real Estate – The Nightmare of Foreclosure
There is the lingering fear of foreclosure that many homeowners suffer from. In some cases, unexpected financial crunch, loss of job, exorbitant medical expenditure, divorce or a person dying in the family can influence homeowner’s affordability to furnish his or her payments of the mortgage. A foreclosure happens when one lags behind in payment of the mortgage, thus making the lender retain your property.
In some cases the property is less valuable than the actual amount you have to pay to the lender. This leads to a complication of things, and it enables the lender to take up a deficiency judgment. The deficiency judgment depicts the difference between actual price of the property and the amount that you have to pay to the owner. If such a thing happens, one will not be able to retain his property. Also, he or she will need to pay an extra amount.
In the worst scenario, deficiency judgments and foreclosures will influence the credit score very badly. The foreclosure will remain in the credit report for more than seven to ten years. This will reveal to the future lenders that you might not be a suitable borrower. Things will get difficult for one to retain a mortgage of avail of a loan in the near future.
Be cautious of the foreclosure scams
As bad luck would have it, there are a huge amount of fraudulent companies which claim to come to your aid when there are imminent foreclosures. These companies wait to lay the bait for you and cheat you. These companies call themselves as the consultants with regard to foreclosure and as the foreclosure specialists. Before choosing any of these fraudulent outfits, check out the credentials and business credibility through sources as the US Department of Housing and Urban Development.
One has to know how the foreclosure scam specialists get to know him. They usually find it in the foreclosure listing in the local newspaper. Very soon, call start pouring in trying to deceive you into a deal.
There are various methods adapted by the fraudulent companies to cheat homeowners. The tricks that they adapt are
- Equity Skimming
- Equity Stripping
- Fishy Counseling Agencies
- Lender Scams
- Fishy Loan Transaction
- Internet and Phone Scams
Foreclosure is a very serious issue. If sufficient care is not immediately taken, you may lose your home and your credit score is also damaged. One has to have complete knowledge regarding the foreclosure and find out the exact mortgage assistance companies that pull you out of the difficulty. When proper attention is not paid to the difficulty, fraudulent foreclosure companies will start laying the bait. Next to your family, your home is the valuable property that you retain. One should not allow fishy companies to take him for a ride.
Experimenting the skills will challenges in trade
One has to put the trades in a virtual environment before beginning to risk the capital that you own. Dc Fawcett, the founder of Virtual Real Estate Investing Club, has blogs that allow you to submit trades in a virtual environment before investing the capital. Going through Dc Fawcett’s blogs enables you to know of other traders from different backgrounds and experiences. Also, you can become a better investor by reading through the blogs by DC Fawcett.
DC Fawcett Real Estate
Virtual Wholesaling in real estate business has been a very lengthy process though it pays well at the end of the day when we sell the property. However, selling is not easy as it involves a lot of paperwork which involves the important documents such as a deed, sale bill, and affidavit. DC Fawcett gave the guidelines about how to generate leads and close the sale.
This topic is about the difference between the stock market and real estate. There has been a controversy between the two.
Dc Fawcett Tips – Stock Market Vs Real Estate
Real estate investment means purchasing a physical, tangible land or property. Whereas buying the shares of a business means buying the part of company ownership.
Many feel that investing in real estate is better as they are real. One can touch, feel and inspect the property which you own are going to own. Moreover, you can exercise the control over the value and use the investment. In stock holding, you cannot touch and feel the property.
With respect to liquidity, stocks are more liquid as it is easy to buy and sell the shares. Borrowing against the stocks is easier than borrowing against the investments.
Investment in real estate is greater than investing in the stock market.
Both the trades involve a lot of risks but are rewarding if the planning is proper and right decisions are taken at the right time. However, if there is a slump in the market, you can still use the physical property to live, rent and earn a residual income. The same thing cannot be in the case of share market unless it picks up.
Real estate involves a lot of legalities as the necessary papers have to be ready even before the prospective buyer comes to see the property. In the case of the stock market, no such thing is needed. Though both of them are transferable, you can transfer the shares more easily.
In the case of real estate you have to pay the tax, electricity and maintenance even if it is unoccupied or vacant. The same does not imply on stocks.
With the time, the real estate price will always increase. Even if you get a lesser amount than expected, it only reduces the profit margin, but you can never incur a loss, i.e. to say, the real estate value can never be less than cost price. In the stock market, the rates keep fluctuating. The sale rate can be less than the purchase rate.
In real estate trade, the investment choices are limited as you can invest either on land or building. It may be either a residential property or commercial property. In the case of the stock market, the investment options are more.
When one shops his or her mortgage rate, one has to skim through the market scenario. Lenders do not always demand the same fee amount for the mortgage. So, the mortgage rate is not the only criteria you should consider when you are shopping.
Here are some suggestions given by DC Fawcett that are targeted at assisting you go for the shopping experience, and at the same time make out a huge chunk of money.
Highlighted mortgage rates come along with points – Dc Fawcett Tips
You might have viewed the mortgage rates on television, heard it in the radio, or browsed online. Mostly, these mortgage rates come along with points.
The lesser rate might not be the best option
Most of the shoppers who are on the lookout for the lesser interest rates have to do it at a certain cost. The lowest rate may include a huge fees and it needs some discount points.
Confirm the amount that is charged for the mortgage rate that is provided so that you can precisely know whether the deal is a good one.
Dc Fawcett Reviews – Make a comparison of the costs of the rate
Adding up to other costs, one needs to make a comparison of the expenditures of making the loan at a par rate and the cost needed to buy down the rate. And, it may work in your favor when covering all your closing costs, particularly when you are in a financial crunch. Or the case might be that you do not stay in the residence for long.
Compare different types of loans
DC Fawcett Says ,When you compare the pricing, you should also skim through different types of loans. If the loan is for a lesser amount, one could refinance to a lesser rate and rarely raise payments that are done on a monthly basis.
Dc Fawcett Suggestions – Be careful of bad recommendations
Do not go for an over extension of yourself just because the broker or the bank promises to pay off the mortgage in a shorter span of time.
Sometimes, the suggestions might not come to your aid. One has to do his own research before going for shopping. One should have a solid idea as to which plan would be in favor. One should not just blindly follow the alternative provided by the loan officer.
It is usual that you are pitched an adjustable rate mortgage when you are after a fixed loan. This is due to the fact that the deceptive low rates and payment will appear alluring.
Take into account the banks, lenders, brokers and credit unions
One should go and shop to the maximum extent. It means that the rates have to be compared online, contacting the nearest bank, a credit union or considerable amount of mortgage brokers.
If you do not go for an extensive research, you might be missing a good chance.
Make a research of the companies
When one goes shopping around, a lot of homework is required. When making a comparison of the rates, also carry out research about the companies to assure that you have approached a legitimate and a dependable lender.
A buydown mortgage is something in which the buyer buys down a loan. He obtains a lower interest rate and lowers the monthly payments. In this article, Dc Fawcett, an expert in wholesaling, rehabbing and cash flow investing, reviews a buydown, the types of buydowns and the benefits of a buydown.
The buydown mortgage works by depositing cash estimated by calculating at the buydown percentage in advance. The bank or the lender then reduces the interest rates and hence the monthly payments. For instance: you are taking a 30 year old mortgage for $ 30,000 for a rate of interest 5%. You can pay a 1% extra upfront fees and the lender lowers the rate of interest by 0.25%. The rate of interest then diminishes by 1/4. This helps you save money in the monthly payments and helps you plan ahead.
A 2-1 buydown is a Mortgage where the interest rates are lowered in the first 2 months and then it becomes a fixed rate mortgage. The interest rate increases step by step and becomes constant after the first 2 months.
A 3-2-1 buydown
A 3-2-1 buydown is a technique in which the interest rates are lowered by 3%, 2% and 1% in the first 3 consecutive months. They increase in this slow fashion and then become constant. This 3-2-1 buydown mortgage is extremely beneficial to the buyers. They can save money for the increased monthly payments ahead. The fact that the interest rate becomes fixed after 3 years helps them plan ahead by looking at their present monthly income and saving for the future.
What should you consider before you take a buydown – DC Fawcett Real Estate Tips
Before you take a buydown, it is important to estimate over what time you can earn back the interest bought down. Suppose you pay a buy down amount of $25000 for a mortgage, then you should be able to estimate after how much time you can get this money back. The decision to take a buy down also depends upon how long you are going to stay in that home.
Benefits of a buydown
A home builder or seller offers the buy down sometimes. He allows a buy down for a fixed period or for the entire mortgage. This allows the home buyers who cannot afford heavy downcash or those who cannot pay high monthly payments to become eligible for the loan. This type of buy down is usually a no cost mortgage interest rate buydown. Another important benefit of a buy down is that the down payment can be deducted from tax. This down payment comes down as mortgage points and can be debited from tax only in the same year as it is being paid for house purchase.
One of the real estate financing method for investors with low credit is opting for sub-prime mortgage and high rate of interest is levied by the lenders. DC Fawcett Reviews This is done so as to compensate the loss due to payment default if any in the future. The loan is characterized by variable rate of interest than fixed rate.
DC Fawcett put forth his ideas about availing mortgages with low credit.
- Sub-prime loans levy high rate of interest than prime loans. The risk-based pricing factor has to be kept in mind while applying for sub-prime loans. Investors are already affected by low credit score; further debt will lower the score, so sub-prime loans can be applied only when score is improved.
- In some cases borrowers may take a higher interest second mortgage to help qualify for a lower cost first mortgage. They are characterized by many fees like balloon payment penalty, pre-payment penalty etc. Apart from that pre-payment penalty is levied that is against the home buyer if the loan is paid before the time period which is usually 5 years.
- A balloon payment is a huge sum of money is paid by the investor to sell the home or for refinancing. The first-time homebuyers may or may not come across these types of payments, which is actually a scam. The scammers make use of this opportunity and mint money.
- In order to prevent such happenings, it is better to take the help of financial advisors. The legal paperwork must also be reviewed. The bad credit may happen due to late payment, Non-payment of debts, already existing debt and issues related to credit history.
- When you are writing checks, you must be careful; bad checks lower the score. The lenders expect a score of 650 and above to approve a loan and also the rate of interest will be low. As investors have low credit, documentation is must which is expected by the creditor.
- For investors having scored less than 620, the loan process is longer where he/she has to cross many obstacles and questionnaires. They have to reason out why the score is low. If the score is less than 620, the investor is under risk and can apply for loan when it is 650 and above.
- Another type of loan is 2/28 ARM offering loans for 2 years with a fixed rate and then the rate is adjusted. Failing to pay the mortgage on time will result in loss of home ownership or in other words, foreclosure.
Joint borrowers (couples) who apply for a mortgage together pay a higher interest rate than individual borrowers. There are more chances that one may have a good credit score and other with a low credit score. This is pretty advantageous for an individual with a low credit as they can use their spouse to be a co-signer.
DC Fawcett is the creator of Virtual Real Estate Investing Club. You can get to know about what’s viable in today’s real estate market scenario here. DC Fawcett is very active in his real estate deals including rehabbing houses, wholesaling etc.