Home Loans And Mortgages

Tim Said:

How many home loans/mortgages can I take out at a time (on separate properties)?

We Answered:

as many as you can afford.

However, each deal needs to stand on their own merit.

With investment loans, you usually have to put 20% down. Plus the lender will count only about 60% of the total income. other 40% goes to non loan expenses.

For example: rent is 1000 a month. Lender will say you have 60% income. Your mortgage is 700 a month. Cash flow you have a $100 positive. But to the lender you have a 100 negative.

I have many rental properties and the MOST IMPORTANT THING IS THIS: CASH FLOW.

You can have millions in equity and if you can't pay the bills each month, you will lose everything.

As a rule of thumb, I recommend that your TOTAL mortgage payment (loan, taxes, insurance, HOA, etc) do not run MORE THEN 50% of your gross monthly income. The other 50% is NOT profit, but will cover other expenses.

Christina Said:

Home loans with low down payments require PMI insurance, so why are banks losing money on sub-prime mortgages?

We Answered:

There isn't any PMI on subprime loans, so the answer is NO. A few years ago when the subprime market was at it's peak, millions of these loans were underwritten and approved. They were typically 2/28 ARM loans and PMI insurance companies would not even insure these loans. The interest rates were high to start with, but fixed for 2 years. The plan was for the borrowers to clean their credit up before the 2 year period was up and then to refinance into a low fixed rate mortgage. Unfortunately, this didn't happen and borrowers who could barely afford the initial payment, certainly couldn't afford the increased payment when the adjustment took place.

PMI insurance is for credit--worthy loans, not subprime loans.
Banks are losing so much money on these loans because people can't afford the new and higher payments and are walking away from their homes. Foreclosure is at an all time high everywhere.

Joseph Said:

Why do banks charge more interest on car loans than on home mortgages?

We Answered:

There's more risk with a car loan than a home loan. Cars depreciate in value where homes typically appreciate in value.

Don't confuse yourself though, auto terms are only about 3-7 years long vs. a 30 year mortgage term. The lender makes hundreds of thousands in interest on a mortgage because the term is so long vs. only a few thousand on an auto loan.

Anita Said:

Why aren't Credit Unions failing with their home loans and mortgages?

We Answered:

The explanation is very simple: most credit unions do not make subprime mortgages, nor do they make "exotic" home loans, for example a loan for 125% of the home's value.

Hope this helps. Good luck.

Arlene Said:

home loans?

We Answered:

All mortgage conditions have been tightened up because the boom is over and mortgage companies are faced with huge amounts of foreclosures.

No one without an income has any business borrowing money because there is no way to repay it.

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