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We’re all fully aware of the crisis in the world housing market, especially in the United States, it’s practically impossible to have missed it with all of the coverage on the news.  Unfortunately, this situation has affected Canadians as well.  It’s more difficult than ever for a person with no down payment to get a mortgage in Canada.  With the cancellation of the zero down mortgage programs, many people now believe that if they don’t have 5% down payment to buy a house they won’t be approved for a mortgage. Although it’s a little more stringent, it’s still possible to get zero down mortgages, however it’s in the form of what the banks call cash back mortgages.

Cash back mortgages are a great alternative for someone who wants to take advantage of the low price of housing in Canada right now but doesn’t have 5% down payment to purchase a home.  Alternatively, some people have saved for their down payment but don’t quite have enough.  A cash back mortgage would be a good option for this situation as well.  You’re probably wondering what’s the difference between a cash back mortgage and the zero down mortgage programs?  The banks would like you to believe that there is essentially no difference between these two mortgage products, but that is not the case. Although cash back mortgages are a fantastic alternative to the zero down mortgage products, there are significant differences.

The first and most important difference is the interest rate.  When the banks were offering zero down mortgages the interest rates were the exact same as if you had 5% down, with a cash back mortgage, the interest rates are usually about 1% higher than a traditional mortgage product.  However, this is offset by the fact that the bank is giving you your down payment.  That means if you have a cash back mortgage for $100,000 the bank will give you 5% down, and you only have to pay back $95,000. Banks would like you to believe that they are giving you the 5% out of the goodness of their hearts, but the fact is the interest rate is higher on this product so they can recoup that 5%. The good news is, at the end of your 5-year term with that bank, you are free to shop around again for the best rates.
 
The second difference between cash back mortgages and the zero down mortgage programs is the penalty if you break the mortgage before the 5-year term is up.  On a traditional mortgage at 100% financing, if you break the mortgage the penalty is the same as any other mortgage, the standard 3-month interest penalty would apply.  With a cash back mortgage they also charge a 3-month interest penalty, in addition to that you have to pay back a portion of the cash the bank “gave” you.

I know it seems like I am trying to deter you from a cash back mortgage but that isn’t the case, I just think it is important to enter into cash back mortgages fully aware of the product.  It is important to weigh your options carefully.  If you decide to wait and save up a down payment for your house because you don’t want to pay a higher interest rate, one very important point to consider is. Every year on average houses increase in value by approximately 5%, so,  if you were to purchase a house for $100 000 today that same house would cost you $110 000 in two years. 

If you consider waiting because the interest rate seems a little high you should know that a cash back works out to about a quarter of a percent higher than a traditional mortgage, when you consider that you are not paying back the cash back portion.  On a $100 000 mortgage over five years you will pay approximately $4,800 more in a cash back mortgage than if the zero down mortgage program was still available.  However, if you consider that waiting two years to save would cost you $10 000, the cash back mortgage would cost less than waiting and would be an excellent option to get into the housing market.  Cash back mortgages are excellent options for homebuyers, but you should make certain that you are fully aware of the conditions in your mortgage. 

There are more reasons to understand the foreclosure process in the US than ever before. In September, 2008 alone there were 81,312 homes that were lost to foreclosure. The 3rd quarter of 2008 showed a 71% spike in foreclosure rates as compared to last year at this time. These are record-high numbers and it should be obvious that lenders do not want this trend to continue. Still, the fact remains that over 851,000 homes have been repossessed since August of 2007. The housing crisis in America is smothering homeowners – along with the rising costs associated with fuel. People are being financially crippled and hundreds of thousands are falling under every day.

In September, 2008 there were over 265 thousand borrowers that received notifications of foreclosures. Although that number is down 12 percent from August, it is still a 21 percent increase from one year ago. Many times in the past have shown foreclosures to be a result of a weakened economy. This current cycle of foreclosures has in fact caused an economic downturn.

As a result, many states have relaxed their housing laws to slow the rate of new foreclosure filings. This accounts largely for the 12% decrease from August to September. Lenders are now being required to give significantly more lenient notices before initiating the foreclosure process against borrowers. Other law changes are being made as well in favor of the borrowers, but financial analysts fear that even these new relaxed laws are simply putting off what will soon happen anyway.

The effect seems to be that when borrowers receive a longer-term notice before the foreclosure process is initiated, they simply seem to get further buried in their debt. With each passing month, mortgage payments, late fees and costs associated with the foreclosure process continue to mount, and the borrowers are simply overwhelmed. They cannot catch up and so after the notification period extinguishes, foreclosure rates spike again.

The Federal Housing Authority initiated the “Hope for Homeowners” rescue bill on October 1, 2008. It was designed to re-instill investor confidence and absorb some of the poisonous debt that has accumulated. The US Treasury is also buying up troubled loans in an attempt to re-stabilize the various lending entities. As a result, it is projected that by the end of 2008, between 25% and 33% of all homes will be owned by banks and backed by the Federal Housing Authority.

The new laws in many states concerning the foreclosure process give temporary reprieve to tens of thousands of borrowers. It is highly advisable to take advantage of this leniency if you are one of those who are threatened with foreclosure. Consult with a qualified foreclosure consultant and explore the options that exist for saving your home. Many times, a professional foreclosure consultant can show you ways to have the foreclosure process negated and allow you and your family to stay in your home. To learn more about the foreclosure process and your rights regarding it, please visit Stop Foreclosure Help Today. We can help you to keep the home that you have worked so hard for.

Foreclosure:

At the advent of the credit crunch, it has been increasingly difficult for everyone to maintain payment of their debts.  This has been due to an escalation of interest rates and instability of jobs in the market.  Workers have been layed off everywhere. One of the sectors that were struck hard by the current financial crisis is the real estate sector.  Home buyers have been finding it more grueling now than ever to pay off their mortgages to the banks.  When the home buyer reaches the point wherein he can’t pay the mortgage anymore, the bank or the financial institution can seize the property and sell it to somebody else.  This is called as foreclosure.

Foreclosure:

Foreclosure is the legal process by which the lender revokes (forecloses) the borrower’s right of redemption to a property that is still under mortgage to the lender normally due to delinquency.  A court order (specifically called a foreclosure order) is required in foreclosure of a property. The borrower is given an opportunity by the court to redeem the property by payment of the entire loan including the foreclosing expenses.  However, if the home owner was not able to pay the whole amount within the prescribed time, the court will proceed with the court order. Thereafter, the mortgaged property can be put on sale by the lender.  Sales proceeds will go to the lender and will give the remainder to the borrower (if any). If the sale is not sufficient to cover the whole debt, the borrower is still liable to the lender of the shortfall.

Disadvantages of Foreclosure:

It is a sad situation when one’s home has undergone foreclosure.  Of course every home owner would want to stop home foreclosure now more than ever since the value of the real estate is plummeting.  Chances are that people would be buying the mortgaged home in a value which is lower than its “real” value.

How to stop home foreclosure?

The next question would be how we can stop foreclosure? Specifically how can we stop home foreclosure?  With today’s typical financial crisis and economical juncture, everybody is faced with a risk of encountering unfortunate situations may lead to foreclosure of one’s home.

One way to stop foreclosure is by availing loan from financial institutions.  The homeowner can use the proceeds from the loans to pay off their debt to the real estate lenders.  This is to avoid losses by selling the property at a lower value.

Avoid Foreclosure:

Of course it is still best to avoid foreclosure rather than remedy it.  Home owners should look at their credit standing first before going to a home mortgage.  They should also check their capacity to pay the loan. The financial crisis should give a clear message to everyone to not live beyond their means.

Monthly payment for loan should be up to date so they will not pile up and become a burden later on.  Delinquency starts with a month of not paying the loan that later on bloats up.

These are only some of the ways on how we can stop foreclosure now.

Help yourself and let us stop foreclosure now.