Mortgage rates have never been this low in recorded history (since mortgage rates have been tracked), a testament to the impact the Federal Reserve is having on borrowing and lending in this country. The last few months have been a far cry from the days of 6-8% interest rates in the hey-day of American real estate from 2001 to 2006, before the housing bubble popped so spectacularly.

Now, the only question is whether or not these falling rates will spur even more home buying from investors and homeowners looking to jump into a hot buyer’s market.

Last week, the average rate for a 30-year fixed-rate mortgage loan across the country stood at 3.98%, which was up from previous lows established earlier this year. The weekly drop was a 3.87% decrease, one of the largest weekly drops of the last couple of months. A smaller but still significant margin of decrease was found in 15-year fixed-rate mortgage loans that now stand at 3.14% from 3.24%.

Amid falling home prices – the S&P/Case-Shiller index of home prices in 20 U.S. metro areas fell by 3.7% annually as of November 2011 – and increased numbers of foreclosure listings on the market, low interest rates are very attractive to potential buyers because they offer cheap financing. So far, though, impact of low mortgage rates on improving the real estate market is less than expected.

The main obstacle appears to be a lack of sufficient demand caused by consumers who are either hesitant to buy without reassurance that prices will stabilize in the near future or unable to find financing from lenders who are still dealing with tight credit, toxic assets, and potential lawsuits related to foreclosure fraud accusations.

Add in nearly 11 million American homeowners who owe more on their mortgages than their homes are worth at current price levels, and one can see the difficulty inherent in the market today.

President Obama’s administration is working on helping investors purchase large blocks of government foreclosures and helping homeowners refinance their homes at today’s low rates. As a result, low interest rates could have a positive impact in the near future.

According to one analyst – Anish Lohokare from BNP Paribas – “This HAMP change should have a muted impact at best”, primarily due to a failure to really address one key player left out of the change: the mortgage loan servicer.

Right now, modifications to HAMP (now called HAMP 2.0 by many) call for a 200% increase in the amount of financial incentives given to lenders who agree to reduce the principal of outstanding mortgages, thus helping stricken homeowners reduce their overall debt load and monthly mortgage payments. This in theory could help many avoid foreclosure by giving them more affordable mortgage payments – but the agreement would also cut into the profit margin for mortgage loan servicers, who typically receive a percentage of the principal as payment.

As a result, many loan servicers refuse to actively participate in the program, and currently there are few overpowering incentives to do so from the federal government (who has not yet taken the controversial step of mandating participation for lenders operating in the U.S.)

Principal reductions are widely thought to be a key component of any successful plan to reduce the number of foreclosure properties that hit the markets each year. By writing down the principal, the bank is not only reducing the monthly payment – thereby giving consumers more money to spend or save each month – but is also lowering the total cost of the home, once interest and capitalization is taken into account.

Not enough lenders are participating, though, and as a result, instead of four million Americans impacted positively by HAMP, only roughly 900,000 have qualified- and less than half have achieved a permanent modification.

The next year will be critical in determining if HAMP 2.0 succeeds and helps to reduce the national foreclosure rate – or if it fails to adequately address the foreclosure crisis on a large enough scale to make a noticeable difference, unlike its previous iteration. The program has only been extended through to 2013, which is not a lot of time to make a noticeable impact.

At some point, in order to have the full impact its designers want it to have, HAMP 2.0 will require some tweaks and adjustments to obtain full participation from all players involved – not just homeowners.

The settlement, in the works since the scandals first broke in the fall of 2010, will call for $25 billion from lenders – including Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial, and Citibank – to go toward reducing the principal for nearly 1 million mortgages, paying 750,000 homeowners $1,800 a piece, and helping homeowners refinance at 5.25% for their current loans (many of which have interest rates much higher than current amounts).

There is also the possibility of mortgage processing reform to come with the package, although nothing definite is set in stone.

The settlement has been a long time in the making, but already several key players have backed away – including California’s Attorney General Kamala Harris, who unequivocally stated that her state will have no part of a deal that is “inadequate for California”. Other attorneys general across the country have issued statements along those lines in the past year, including threats of investigations into the banks and their foreclosure practices.

Most of the criticism toward the settlement revolves around the presence of some degree of civil immunity for the banks from the states – a measure that has not only served as a flashpoint for criticism against the major banks and settlement process, but also single-handedly stalled negotiations for months.

Nothing, though, provides criminal liability immunity, which could come into play with several major probes and investigations planned against certain lenders in the near future.

With nearly 11 million homeowners underwater on their homes, and hundreds of thousands of foreclosure listings on the market, a foreclosure settlement is needed to regain some sense of normalcy to a domestic real estate market weighed down by low prices and an abundance of supply. While it is still doubtful whether or not this settlement will have the impact the Obama administration desires, a solution is more likely to happen with the banks on board than in the courtrooms at this point.

There is no word yet on how many states, exactly, will sign the settlement; at least a handful, including California, New York, Delaware, and Massachusetts, have either balked or refused to sign. Some in the industry doubt the settlement can succeed even with widespread support if key states like California and New York don’t join.

For now, though, the settlement appears to be heading in the right track.

There are numerous reasons to avoid foreclosure prevention companies with scams and fees coming in at the top of the list.

Steep Fees for Sketchy Service

Many people fail to understand that the most legitimate foreclosure assistance is completely free; therefore, if someone is charging you and promising to help you keep your home from undergoing foreclosure then you should immediately be skeptical. Many foreclosure prevention companies charge ridiculously high fees, money that could be used to actually pay on your home and help reduce your chances of losing your home. Plus, most of the services offered by these companies (like foreclosure counseling) can be obtained for free.

Before giving anybody money to assist you with foreclosure, it is highly recommended that you utilize foreclosure resources and information online. In the end, if you decide to go with a foreclosure prevention company despite the risks then make sure to thoroughly research the company both online and with the Better Business Bureau.

The Risk of Scam

Along with paying a lot for services that you can normally receive for free, many foreclosure prevention companies have turned out to be scams. Imagine facing the possibility of losing your home and paying hundreds to thousands of dollars to a foreclosure prevention company that claims it will protect you from foreclosure. A few months later you are not only without your home but you also are out the money you paid the company for the services you never received.

Anytime there is a severe need that is tied to something emotional (such as losing your family’s home) there are scammers that are ready to take advantage of the situation. Unfortunately, these foreclosure prevention companies are simply trying to earn as much money as possible without much concern for your family. As a result it is pertinent that you are aware of the high possibility of being scammed when seeking a foreclosure prevention company.

In the end, facing foreclosure is a very serious process that often leads to uncertainty and fear. Do not put yourself in a worse financial situation and face the possibility of being scammed by relying on a foreclosure prevention company. Instead, find free resources online.

Those watching the domestic real estate markets for signs of any relief in the foreclosure market may have the beginnings of good news from the West Coast. According to recent reports, foreclosure starts – initial filings from lenders to jumpstart the foreclosure process against delinquent homeowners – declined in four out of five states being tracked. These four included Arizona, California, Nevada, and Washington. Oregon was the only state that reported an increase in foreclosure starts.

Additionally, foreclosure sales increased in California and Washington while dropping in the other three states. Combined, these reports indicate extensive decreases in the average foreclosure timelines in several key states in the region. California in particular experienced a dramatic 16.9% drop in its average foreclosure processing time, a combination of fewer starts and more sales. Nevada also reported a noticeable decrease in its foreclosure processing timeline.

Of course, investors and homebuyers who want to see the beginnings of a real estate market stabilization and reversal should view these numbers with caution. After all, Nevada had a 14% drop in foreclosures for the month of December, 2011 predominantly due to a new law that adds more paperwork to the foreclosure process – already stretched out to an average of 331 days. This effectively means that foreclosures are harder now to process in Nevada, which will skew the overall foreclosure rate.

It is easy to view these figures and see improvement, and indeed, some of the reduction in foreclosure starts may be systemic in nature. But, it is also likely that any reduction is a product of changes or modifications to the foreclosure process itself, which doesn’t speak of any major improvement in the economy or real estate market as a whole.

Which is closer to the truth – real improvement in the market, or skewed figures that only look positive? The truth is somewhere in the middle; after all, fewer foreclosure starts are hard to misinterpret, and that is a clear-enough sign that lenders are, at the very least, slowing down the rate at which they send new foreclosures through the pipeline.

There will have to be some underlying improvement in the system and economy before it can be said with confidence that fewer foreclosures are actually occurring – and that the decrease is not due to a skewed perspective.

Buying a home these days involves a lot of major decisions – one of which concerns some of the most important people in your life: your children. Having children changes the decision-making equation dramatically. There are several areas of concern associated with home-buying due to having children, and a wise homeowner and parent will address each when choosing which property to purchase – especially when considering the local neighborhood.

Here is a guide to picking out the right neighborhood when children are in the picture.

Environmental Factors

The surrounding environment – what is immediately around the home, what area of the city the home is in, etc. – has a lot to do with whether or not the property itself is desirable for a household with children. After all, it’s not just about the house itself. A great house can be a bad place to raise children if it isn’t in the right part of town.

Area

One thing to look at is the immediate area, in most places the neighborhood. Is the neighborhood kid-friendly? Are there clearly-posted speed limits, ample lighting, a lack of harmful obstacles, and other factors that make the neighborhood safe? Also, are there other children nearby?

Crime Rate

You do not want to live in a part of town that has a high crime rate if you can help it. This is not always the case, but for the most part, do your best to live as far away from a crime-riddled neighborhood as possible. At the least, try to choose a neighborhood that has an active community and a good neighborhood watch program.

Nearby Amenities

It always helps to have certain amenities nearby, like grocery stores, pharmacies, all-purpose shopping centers, banks and ATMs, gas stations, etc. If you like organic food, an organic food market is preferable. If you have very small children, a store that has infant supplies is a plus. Look for amenities that fit your family’s needs.

Emergency Center

No one wants one of your children to get hurt, but if one is injured, you want to be relatively close to an emergency center if at all possible. At the least, try and find a nearby walk-in clinic for all the ills, bumps, and scratches that kids collect.

Look for These Facilities in Your Area

In addition to the above, there are several facilities that have a major impact on the desirability of your property, and could even have an impact on the price of your home (as discussed later).

One of the main facilities parents want when choosing a home is a great school. Living in a good, solid school district – or being relatively close to a private school – is at the top of the list for many parents when choosing a property, and that is understandable; having a great school is one of the key steppingstones to success for a child. Know that a good school district is perhaps the single biggest factor outside of the property itself that determines the price of your home.

Hospitals, as mentioned above, are also very nice to have nearby, but so are daycare centers – particularly if you are a new parent or have young children. This also could have an indirect influence on how much properties in your neighborhood cost because it is frequently something parents look for when planning a home purchase.

Finally, a good play center nearby – such as a kid’s play zone, arcade, or other family-fun destination – is a blessing because your family will have a much-needed diversion whenever cabin fever sets in.

How the Area Impacts Pricing

If you have children and have never bought a house before based partly off of raising children in it, then you might be surprised to know just how much of a home’s price is determined by the area in which it sits – and how much of that price increase is due to the area being a child-friendly environment.

Simply put, homes in a good area will have a higher price tag than homes in areas viewed as less than desirable for families. Take the same exact home and place it in two different areas: one area is a good place for children, with a strong public school district, plenty of amenities, and a low crime rate; the other area is in a part of town with a troubled school district, lack of access to desired amenities, and moderate crime. The price for the first home will be noticeably higher.

The more centrally-located your home is, the more expensive it will be to purchase. But, by shopping around for great deals – especially with foreclosures – you can find homes that do not cost as much but are still located in great areas.

In the end, be aware of how pricing is directly and indirectly impacted by the environment in which the property sits due to children being involved in the decision-making process.

Many Americans today cannot make their monthly mortgage payments. Additionally, for millions of Americans – approximately 11 million as of 2011 – owing more on their home than it is currently worth is a sad reality. This situation is especially bad considering median home prices are only expected to decrease over the next 6-12 months in most forecasts.

Short of prices suddenly reversing themselves, underwater homeowners do not have many options left open – nor do people who, for whatever reason, cannot make their current monthly payments. Fortunately, there is usually the option of a loan modification that is at least a possibility – particularly with federal modification programs either in play now or in the works.

Here we will discuss how you can increase the odds of successfully negotiating a loan modification for your home.

What is a Mortgage Loan Modification?

First, an explanation is in order. A mortgage loan modification is an agreement between you and the lender in which the lender agrees to modify the terms of your mortgage contract to help you continue to stay in the home and pay off the loan. They do this because they would rather have a steady source of income – your monthly payments – than face the cost and hassle of repossessing the home and selling it on the market.

Now, a lender is by no means required to carry out a loan modification. Even under the strictest federal programs, such as those involving HUD, Fannie Mae, and Freddie Mac, loan modifications are not mandatory; a lender simply has to make them available.

What are the Benefits?

The primary benefit of a loan modification is to make living in your home and paying payments more affordable. It will usually accomplish one or more of the following:

- A lower interest rate, which results in lower monthly payments;

- A longer loan term, which also results in lower monthly payments;

- Principal reduction, which reduces outright the amount of principal you owe

Of the three, the third option is the rarest. But, all things considered, hitting on at least one of the above benefits is very possible (and given the number of foreclosures lately, pretty likely).

How Do I Apply?

There are two ways to apply for a loan modification. The first is to ask your lender, typically represented by your loan officer. Banks have procedures to follow and paperwork to fill out, so opening up a line of communication is often the first step.

You can also turn to the federal government. If you have an FHA loan, you can participate in a FHA Short Refinance, designed to help people who owe more than their homes are worth but are not behind on their payments currently. The Department of Veterans Affairs also gives you opportunities to participate in a loan modification program, if the lender agrees. Most of these programs were made possible through the Home Affordable Modification Program (HAMP).

For VA loans, call 877-827-3702 or visit http://homeloans.va.gov. For FHA loans, call 877-622-8525 or visit http://hud.gov/offices/hsg/sfh/nsc/nschome.cfm.

Ways to Increase Your Chances of Success

Once you know what a loan modification can do for you, and you want to apply, you can take certain steps to increase your chances of success.

What Factors a Lender Examines

It helps to know what factors the lender examines and takes into consideration when deciding whether or not to move forward with your loan. The first is your ability to make your current payments. Are you currently behind on your payments? It may sound counter-intuitive, but if you are, you are actually more likely to receive a modification than if you are still current. That is because banks will take delinquent clients as a greater priority over non-delinquent ones. They are protecting their investment, after all.

Another factor is your source of income. If you cannot foreseeably maintain payments on your home, regardless of whether or not you are behind, they are less likely to grant you a modification.

What is the nature of the hardship that is keeping you from making payments? If it is a permanent hardship, banks are less likely to approve the loan because they do not reasonably expect you to be able to make payments in the future.

How long have you been paying on the home? Those who have been paying on their home loans for longer periods of time are more likely to be approved.

Finally, the finances have to make sense for the bank. In other words, you have to show them that keeping you in the home, making payments – even reduced ones – is better in the long run for the bank than pursuing foreclosure. If you can show them this – and even take the extra step of preparing financial projections with you as a borrower versus the bank owning the home and going through foreclosure – then you will have a stronger case.

This last point is critical. After all, one only has to go to an online foreclosure directory, like BankForeclosuresSale.com, to see just how many foreclosure properties are available for purchase for deeply-discounted prices, all to the detriment of the banks that own them.

Turn to a Professional

One major piece of advice is to turn to a professional to assist you with your application. Start with a real estate lawyer and ask him or her to review your contract and the loan servicer’s servicing history to see if there have been any legal violations on the part of the lender since you have had the loan. If so, you are in a very powerful position, as banks are very vulnerable currently to lawsuits for mortgage loan fraud and abuse.

Even if you can find no legal violations, you can still obtain help. Ask an accountant to review your finances and put together a convincing case for the bank to consider. Consult with a mortgage loan counselor who can help you prepare your application. Talk to a credit counselor to repair your credit score, which is reviewed when you pursue a modification. Find a second job if you must in order to provide more income, which always helps.

Communicate Early and Often

Finally, you can increase your chances of success by talking to the lender early and often. Applicants who wait until the last minute, right before their home is set to be foreclosed on, are almost always denied. Communicate to the lender your difficulty with making payments and be an open and honest participant in the proceedings.

Lying on your application is a huge no-no, as any misinformation or deception will only come back later to give you trouble you did not anticipate. There is a temptation to withhold information, but the more data you provide, the better off you will be because banks now expect a certain level of insight into your finances before they will grant you their approval.

In the end, a loan modification is a process by which you work with the lender, not against them. It can happen and does on a daily basis; hopefully now you will be able to benefit from that as well.

Buying a new home is still very much part of the American Dream. We, as citizens of the United States, long to have our own home that we can customize without restriction. When you rent a property, you are often unable to paint the walls and do even minor renovations. In comparison, when you have your own home your creation is no longer limited.

(And that is not even mentioning the myriad of financial benefits to owning versus renting.)

Purchasing a new home takes a lot of planning and effort. You must first decide if you want to buy a new property or a discounted foreclosure property. If you desire to purchase a home that is not in foreclosure, then you can search online or visit a local real estate company. However, if you are interested in getting a home up to 60% below market value, then there are several home listing services, which provides immediate access to distressed properties across the country.

After finding a home, it is then time to get the right mortgage rate. Obviously obtaining a low interest rate can save you a fortune in the long run, but how exactly do you go about getting the right mortgage rate for your needs?

Where to Start

Now that you have decided to purchase a home, it is time to find the right mortgage rate for you. The following steps will help you to obtain the right interest rate, which is not always the lowest.

1. Research Lenders

The first step in getting the right mortgage rate actually involves doing your lender research. It is essential that you find a lender with a good reputation before considering interest rates. Simply make a list of lenders and look online for lender reviews. Narrow down your lender list to include only those with great reputations and positive customer feedback.

2. Contact the Lenders

After making a list of reputable lenders, it is then time for you to talk with the mortgage lender about their rates. It is essential that you ask lenders about the same loan term to ensure that you are getting comparable interest rates. Researching and contacting lenders will provide you with a better idea of which lenders will offer the right rate for you. Remember, do not get sucked into an additional program—stick to your plan and only obtain information for the loan length and type you desire.

Getting What You Want

After researching and talking to lenders, it is then time to obtain additional information and get specific quotes. We will assume that you narrowed your list down to two lenders, each with a relatively solid reputation and competitive interest rates. It is now time to take the process to the next step and discuss the specifics with potential lenders to ensure that you are getting exactly what you want.

The first things you need to talk with the lenders about are your mortgage options. There are a variety of mortgage options such as fixed-rate, adjustable rate, FHA, VA, etc. Each of these options could provide you with different pros and cons. Therefore, it is important that you examine each mortgage option with the lenders.

After deciding which mortgage type is best for your situation, it is then time to discuss interest rates. Which rates do you qualify for? Do you want to buy points to reduce your interest rate? Discuss all of these options with both lenders and then get a final quote. After getting a solid quote from both lenders, it is then time for you to make your decision and pick the lender with the right mortgage rate and options for your home buying needs. Remember that interest rates change on a daily basis and therefore the quote may change from day to day.

In the end, when you decide to purchase a home, it is ideal to get a very low interest rate and a lender with a great reputation. However, sometimes the best lenders have slightly higher interest rates. Although it may seem like a negative trade-off, it is often better to get a lender with a stellar reputation. Remember, you have to work with this lender for the next 30 years—you want a lender that provides incredible customer service and fulfills their roles as a lender while also providing a great interest rate. When looking for the right mortgage rate, find a great lender and a great rate.

With the large number of bank sale properties on the market, many potential homebuyers are filling out home loan applications and seeking approval from their lender. We all know that getting approved for a home loan is a bit more difficult due to the strict lending standards imposed by banks after the real estate market crash. As a result, it’s crucial to understand what banks look at when approving a home loan.

How do Lenders Conduct a Credit Check?

Once lenders receive your application, they will obtain your credit score from the three major credit bureaus (Experian, Equifax, and TransUnion). After carefully analyzing and comparing these three credit scores, they take a closer look at your credit history to determine whether they believe you will be able to pay your mortgage payments on time.

What Stands Out in Your Credit Report?

Although banks will look at the credit scores, they will also take a closer look at your credit history to better determine if you should be approved for the loan. These lenders will look at everything from your credit history to your current debt balance. Lenders will examine your current debt balance and compare that to your monthly income to determine if the mortgage payment is feasible and within your budget.

For example, if you make $2,000 per month and you have a $600 car payment and multiple credit cards that are maxed out, a lender is less likely to approve you for a home loan that would require you to pay $1,000 per month on your mortgage. On the other hand, if you make $5,000 a month and only have a car payment of $600 and very little other debt, approval is much more likely. Therefore, the amount of debt you currently owe and the history of how quickly you pay off your debt are definitely taken into consideration by lenders.

Why is it Important to Understand what Lenders Examine?

Many people are searching for bank sale properties at the various listing services . However, many people are considering properties that are out of their budget. Therefore, understanding that banks closely examine your current debts and compare that with your current income can assist with helping you to ensure the home you are considering is within your price range.

You can obtain 3 free credit reports per year from the major credit bureaus– one per bureau per year – and get a better idea of what the lender is looking at when considering your home loan. Before even applying for a mortgage, check your credit score and current debts and locate a bank sale property that falls within your budget and is more likely to be approved by your lender.

In the end, banks do take your credit score seriously, but they also take a closer look than merely looking at the numbers provided by the credit bureaus. Lenders consider everything involving your credit history including your current debts and recent payments.

In today’s real estate market, many have turned away from living in the city – especially with rental rates skyrocketing – and have instead decided to purchase land and build new homes. This decision works very well for some, but is a very important decision that requires a lot of thought, just like buying a home.

Here we will discuss the benefits of buying land and offer tips for purchasing land and getting the right deal.

Benefits of Buying Land

There are plenty of benefits of buying land that we will cover, namely:

- Freedom of choice

- Distance away from city living

- Building your own home

Freedom of Choice

When polled, many land purchasers state that the freedom to pick the exact place where they want to live is a major plus and a driving factor behind their decisions to buy land instead of purchase a home in a pre-existing neighborhood. Buying land gives you that freedom and flexibility that is difficult to find when turning to existing homes – or even new homes on existing lots in a city or suburb.

Distance Away from the City

Many landowners also do not like living in or near a big city – or any size city at all – and prefer life away from the hustle and bustle of metro living. Even those that do not mind the city prefer to have distance away from the traffic and congestion that goes on in the city on a daily basis.

Additionally, the cost of land and home ownership decreases as you move away from the city itself. This is very enticing for those who want a more affordable way to build a modest home.

Building Your Own Home

Finally, the main reason why people prefer to purchase land is to build a new home to their exact specifications, rather than move into a new one.

In fact, this is perhaps the benefit of buying land – complete and total control over what your home looks like and contains. Custom home construction took a big hit after the 2007 housing crash, but it is slowly yet surely creeping back up – which means people who are looking for the right land are positioning themselves to benefit.

Considerations when Purchasing Land

If you have made the decision to purchase land, here are some considerations you should keep in mind when going through the process.

Utilities

Know what your utilities will be before you sign on the dotted line (or even get near that point). Rates for power, heating, cooling, sewage, and water vary greatly from region to region – and even, in some cases, area to area in the same county. This may not be a factor for some, but for most people, differences in utilities could really matter.

Additionally, some utilities may not be available. There may not be any sewage lines in that particular part of the county, for example, requiring your home to have a septic system installed. Internet is another example; without the right infrastructure, access to high-speed internet may be impossible.

Easements

An easement is essentially permission to use someone else’s land for a particular purpose. Land may have easements attached to it that allow other people to either use the land or move through the land (called a right-of-way), and this could be a major factor in your decision. Public utilities are common beneficiaries of easements. If you do not like the idea of easements, either on your land or surrounding parcels, that is something to consider. Of course, as a landowner you can grant easements to others, but cannot restrict access to easements on your property.

Elevation

Consider the land’s elevation and geographic profile when choosing a particular parcel, too. Without checking out the property – or at least looking at a relief map – it is difficult to get a good feel of how the land sits, which means you can purchase countryside land that has a ravine running through it. Or, you could be faced with building on a hill – something many people enjoy, but could be problematic for you.

Getting the Right Deal

Once you have decided to buy land, getting the right deal is your next step.

Believe it or not, there are land foreclosures just like property foreclosures. Foreclosed homes get all the attention these days, but you can also find foreclosed plots of land – they may just require a bit more research. Online directories have listings of foreclosed land so you can find cheap property where you want it.

Also see what neighboring parcels are fetching in sales and auctions. Use that as a bargaining tactic. Research the past value history of your prospective plot as well. Between this and shopping around for foreclosures, you are bound to find a great piece of property that you can afford.