Mortgage second

It is not very easy to top the list of the best mortgage companies in the country. You have to have the best service, a large network, and the infrastructure to maintain that kind of a reputation. The best top 10 mortgage companies according to the Forbes list are all giants in terms of mortgage. They have operations in many countries in the world. Let us take a look at some of them.

Citigroup

These guys top the Forbes list for the best top 10 mortgage companies. The company started in America and now has operations in 54 countries outside the U.S. Most of these are countries that have never used mortgage as a financing option. The annual revenue is estimated to be $108 billion.

The Bank of America

America’s leading bank, it started to offer mortgage services and small loans and has now become a leader in credit cards as well. The Bank of America ranks second in the “best top 10 mortgage companies” in the Forbes List.

Wells Fargo

One of America’s leading mortgage providers, they have an amazing network with more than 1000 branches across the country. Their revenue was estimated to be $33 million.

Wachovia´s

They are ranked fourth in the best top 10 mortgage companies. Since they have taken over the Western Financial Bank, they have increased their chances considerably to go higher up in the rating.

There are many other organizations as well—like BB&T, Golden West Financial, Popular, and M&T—who also are not quite far behind in the Forbes list of best top 10 mortgage companies.

By: David Johanson

It is estimated there is a target population of some 8.8 million senior households that both qualify for and are good potential candidates for HUD’s home equity conversion mortgage (HECM) program. (Under an HECM loan, a lender advances money to a elderly homeowner, in the form of a series of fixed monthly payments, a line of credit on which the borrower may draw, or a combination. The senior homeowner is not required to make any payments on the loan so long as he or she remains in the house. The lender collects the loan balance-which includes the accrued interest and other charges as well as the amounts paid out-when the house is sold or the owner dies.)

Yet statistics show that in the most recent federal fiscal year, just 43,131 HECM loans were originated; over the sixteen year history of the program, a total of 162,268 HECMs have originated, representing only a tiny share of the potential market.

There are some obvious and tangible factors that help explain this low market penetration, most notably the high origination fees and closing costs relative to amounts that can be borrowed through the program. Less obvious are the intangible psychological fears that may prevent senior homeowners from stepping into a reverse mortgage. Being aware of these factors can help potential borrowers more clearly assess their own situation and make a more calculated decision about whether or not a reverse mortgage is right for them:

Fear of Giving-up a Hard-Earned Goal – Most elderly homeowners have spent their working lives focused on the goal of “paying off the mortgage.” Taking out a reverse mortgage is, in essence, a decision to do a complete turnabout and initiate the process of growing a new mortgage. For some seniors, this just doesn’t make sense, no matter how rational the decision to trade-in home equity for better living standards in later life may appear to a detached observer. Fear of Being Suckered – HECMs are administered, heavily regulated and insured by federal government agencies (in particular HUD). From the standpoint of protecting innocent borrowers from ruthless lenders, HECMs are about as “safe” a mortgage product as can be imagined. Yet there are true horror stories from the pre-HUD reverse mortgage era about seniors being forced to sell their homes or lose them to foreclosure. Unfortunately, these stories have now become urban legends and still taint the phrase “reverse mortgage”. A related issue is the ongoing problem of elderly homeowners being contacted by “home repair” companies, annuity salespersons, and other pitch-men promoting the reverse mortgage as the ideal way to pay for their valuable product or service. The tacky nature of this type of solicitation further increase doubts and fears about whether reverse mortgages are truly legitimate. Fear of Financial Complexity – There is no question that reverse mortgages are complex financial tools. Moreover, by their very nature they run counter to many of the golden financial management rules that senior homeowners have strived to abide by over their adult lives – i.e. “reduce debt”, “avoid high transaction fees”, “grow your home equity”, etc. Largely because of the complexity, HUD requires all HECM applicants to participate in counseling sessions to ensure they have full understanding of the reverse mortgage process and the other alternatives that may be available. Yet, while necessary and well-intended, the counseling requirement itself may scare-off some potential applicants who feel that they just won’t be capable of digesting all the new information presented. Fear of Not Leaving an Inheritance – For many seniors, the desire to leave an inheritance to children or grandchildren is quite strong – even to the point of accepting a more modest than necessary lifestyle to ensure that an estate survives them. Seniors who have this goal and whose largest asset is their homestead, clearly will perceive that a reverse mortgage runs directly counter to their strong bequest motive. Fear of Sacrificing Future Flexibility – To be a sensible financial decision, a reverse mortgage should equate to a conscious decision by the homeowner to stay put for the long term – minimally 5-7 years and, ideally, for the rest of the homeowners’ lives. Obviously, this commitment is especially difficult for the elderly homeowner. Death, long-term illness or incapacity and similar issues weigh heavily on the minds of many seniors and make long-term housing commitments especially stressful.

To a large extent, further growth in the reverse mortgage area will depend on the success of efforts to educate the target population. Some observers feel that the next generation of retirees -i.e. Baby Boomers – will enter their retirement years with a far greater understanding of financial matters and with less aversion to indebtedness. This may prove true but the reverse mortgage concept is so fundamentally different from what people are used to that overcoming the fears of potential borrowers will remain a challenge.

By: Tim Paul

ARM mortgage loans or Adjustable Rate Mortgages are loans that have an interest rate that “adjusts” after an initial fixed rate period. How often arm mortgage loans adjust, depends on the terms of the loan.

Adjustable rate mortgages are considered to be riskier than the traditional 30 year fixed rate loans because if interests rise at the specified reset time your monthly mortgage payment will also rise. If you do not budget properly the increased monthly payment may be too high for your present financial situation causing you to default on the loan.

ARM mortgage loans are popular because they have an initial period of lower interest when compared to fixed rate loans. This often allows a borrower to qualify for “more house” than they would with a fixed rate loan. Again, the risk is that if the loan resets at the specified period of 1, 3, or 5 years to a higher interest, the monthly payments will also rise.

Eighty percent of all adjustable rate mortgages fluctuate based on a complex algorithm of indices from one of these three indexes: 1) the 11th District Cost of Funds Index (COFI), 2) the London Inter Bank Offering Rates (LIBOR) and 3) the Constant Maturity Treasury (CMT) Indexes.

Since ARM loans have the ability to reset at a higher rate than the initial fixed rate, why is this a popular loan for many borrowers? The initial low interest is one factor and another factor is that the risk can be mitigated somewhat by “caps” on the rate swings that are inherent in the loan.

Caps on ARM loans occur on two parts of the loan: the predetermined reset periods of 1, 3 or 5 years and the life-of-the-loan term. The reset period cap restricts the amount the rates can change, up or down, in any given period of time and the life-of-the-loan cap restricts the amount the rate can change, up or down, for as long as the mortgage exists.

Adjustable rate mortgages will continue to be a popular type of loan because they are easier to qualify for and the lower fixed rates are very enticing. If interest rates only gradually increase over time and the borrower’s income gradually increases there is little risk in this type of loan. If interest rates drop then this type of loan can save the borrower a significant amount of money over the life of the loan. ARM loans have proven to be a valuable resource in the mortgage industry.

It is only when a borrower procures an ARM and is at the extreme limits of his or her borrowing capacity that disaster can ensue. If the ARM resets at a higher rate than the borrower can repay monthly, foreclosure may be the result. Make sure you are completely aware of the terms of ARM mortgage loans, including planning for increased rates, before you sign a contract. If you educate yourself for all the contingencies of this type of loan then you will be prepared to benefit from its advantages.

By: Anthony Frankson