Compare Mortgage Loan Rates,Home Loans, Refinance, Home Equity

Loan Modification - Next $350 billion in rescue plan aren't available without loan modification

2009-01-07T23:22:00.000-08:00

A key lawmaker on Friday said that Congress would be unlikely to approve any request from the Treasury for an additional $350 billion in bank bailout funds unless there was an agreement to have some of the money be used to modify mortgages.Does your lender have your best interest? Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the FREE loan modification help and strategy Ebook."If they were to seek $350 billion, there would be members of Congress that would insist on a vote and I don't think there is any way Congress would approve it without a resolution of the mortgage-modification issue," said Senate Banking Committee Chairman Christopher Dodd, D-Conn.Treasury Secretary Henry Paulson has publicly opposed using money from the bank bailout fund to employ a proposal introduced by Federal Deposit Insurance Corp. Chairwoman Sheila Bair.Dodd has joined many Democrats in Congress along with Bair in seeking $24.4 billion or more in bailout funds for a mortgage modification program that they believe would help avoid 1.5 million foreclosures.Rep. Maxine Waters, D-Calif. on Thursday introduced legislation with eight co-sponsors including Rep. Carolyn Maloney, D-NY, that mirrors Bair's proposal.So far, the Treasury Department has already committed $330 billion of the $700 billion bank bailout package.Treasury has allocated $125 billion to buy minority stakes in nine large banks and another $25 billion to dozens of smaller banks. It has also committed another $100 billion to invest in additional financial institutions as well as a separate $20 billion infusion into Citigroup Inc.

Refinancing Models Beginning A New Boom?

2009-01-06T23:18:00.000-08:00

Richard Bove, a Ladenburg Thalmann analyst, states that “U.S. government programs will work and the negative assumptions concerning the weakening of the economy may be excessive.” He bases his analysis on data from the Federal Deposit Insurance Corp for the third quarter of 2008. Bove goes on to say that “To this point investors in bank stocks have paid little attention to the new programs believing them to be inadequate to reverse the economic decline underway. Therefore, bank stocks are falling to levels not experienced since the late 1980s and early 1990s.” If that is the case, wouldn’t a wise investor be interested in buying into financial stock right now?I look for refi to open up in 2009 to the point where people can see some growth in the economy. I also believe that we are a long ways from being out of the woods just yet. Smart investors are not going to jump on every recommendation from an industry expert. We need to remember that billions have been lost, and fortunes wiped out. To jump right back into the fray is foolhardy right now. And that, I believe, is what is going to hamper the jump start of the economy. Tonight’s NBC news predicts that 26% of retail stores will be closing shop next year because of the dismal turnout during the holiday season, when retailers depend on 50% of their income to stay afloat. We see Mervyn’s, Linens & Things, KB Toys and many others going belly up. I am sure a lot more are to follow. Certainly, the playing field is beginning to level.

When is it a good idea to refinance?

2009-01-05T23:43:00.001-08:00

If you have an adjustable-rate mortgage (ARM) and you think that rates will rise or you want the security of knowing exactly how much your future payments will be, you may want to consider refinancing to a fixed-rate mortgage. Or you may want to get another ARM that has more favorable terms, such as a lower adjustment rate cap—a cap that limits the adjustment to no more than 2 percent above your starting rate. (There are also "lifetime caps" specifying the maximum your rate can ever be over the life of the loan.) If you've built up a good deal of equity in your home, you may want to do a "cash-out refinancing" to get money for home improvement or other major purchases. In any case, you’ll need to consider the cost of refinancing including application fees, closing costs, and even prepayment penalties against the savings you will make through lowering you interest rate and monthly payment. Finally, all these calculations need to be seen in the context of how much longer you continue to live in your present home.

How do I find the right lender, broker, or bank?

2009-01-05T00:22:00.000-08:00

Finding the right lender, broker, or bank to work with is crucial to your mortgage search. Who you work with can save you time and money.. A broker typically acts as a "middleman" between a customer and lender and does not may or may not actually provide financing. A lender typically provides financing but often does not offer depository services. A bank provides financing and depository services. Each brings with it different strengths: brokers may be able to compete more on price, while banks may be able to move faster on your loan. So what should you be looking for in a lender, broker, or bank? Mortgage experts say it all comes down to credibility, dependability, and longevity in the marketplace. Most people start with word-of-mouth recommendations from people they trust. But consider the source: Everyone’s financial life is different. When it comes to buying a mortgage, do what's best for your unique circumstances

Fed Moves Forward with MBS Purchases

2009-01-04T08:53:00.000-08:00

On Tuesday, the Federal Reserve named four investment companies it has appointed to start buying up billions of dollars worth of mortgage-backed securities (MBS) during the coming months, in an effort to stabilize the national economy and mortgage market.
The enlisted companies are BlackRock Inc, Goldman Sachs Asset Management, PIMCO, and Wellington Management Co. These parties will assist the Fed in purchasing between $80 and $100 billion of mortgage-backed securities every month in order to meet the goal of $500 billion of MBS by the middle of 2009.
The Fed had announced plans in November to buy up MBS starting in early January in order to provide more liquidity in the ailing lending markets.
Tuesday’s statement made the Fed’s intentions clear. “Under the MBS purchase program, the Federal Reserve will purchase MBS backed by Fannie Mae, Freddie Mac, and Ginnie Mae,” the statement said. “The program is being established to support the mortgage and housing markets and to foster improved conditions in financial markets more generally.”
After the original announcement, mortgage interest rates dropped dramatically and have continued falling. The Fed hopes that by injecting more cash into banks, rates will stay low and encourage both lenders and mortgage borrowers to be more financially active.
In order to pay for these MBS purchases the Fed has said it will increase the money supply, or in other words, print more currency and hope that inflation remains in check.
This aggressive MBS strategy comes just weeks after the Fed reduced its target interest rate to a range of zero to 0.25 percent, effectively eliminating its power to influence the economy with rates alone. The Federal Reserve promised at that time to use all available tools to stimulate the economy and stabilize the mortgage markets.

by Alan Wince

Mortgage Interest Rates Reach A 37 Year Low

2008-12-20T01:04:00.000-08:00

We are seeing 30 year mortgage rate at their lowest levels in 37 years. Now, what we need is for credit to loosen up so that people can buy. It does little good to have low interest rates when the banks are being very tight with their cash. Even with the Fed throwing money at the slumping market, it is doubtful that we will see much change in the near future.
According to the NBC Nightly News, Project Hope was a loser. Of all the counseling people that were interviewed, none could testify to the fact that they were able to help anyone. If memory serves, there allegedly was a great deal of people who would benefit from that program. It appears no one did.
With the latest drop in the prime, banks are being overrun with new mortgage applications. Bart Doerhoefer, mortgage division manager at Commonwealth Bank & Trust in Louisville, reports applications have skyrocketed to higher levels this month, with 110 applications for a total of $21 million as compared to last month when there were 58 applications for $10 million.
Freddie Mac reported yesterday that average 30-year rates dropped to 5.19 percent from 5.47 percent last week. Greg McBride, senior analyst at Bankrate.com said “It’s a call to action for homeowners looking to get out of adjustable-rate mortgages. Unfortunately, it’s not an equal-opportunity party.”

Federal Reserve Makes Historic Rate Cut Decision

2008-12-18T23:36:00.000-08:00

The Federal Reserve made an unprecedented move Tuesday by resetting its target interest rate to a range of zero to 0.25 percent, down from 1.0 percent, citing continued weakness in the U.S. markets as the impetus for the dramatic decision.
“Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined,” said the Federal Open Market Committee in a statement. “Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.”
The Fed has consistently lowered its rate from 5.25 percent in 2006 in an attempt to provide greater liquidity and lending incentive as the economy has suffered, first from housing and mortgage market woes, and then from Wall Street crises. The U.S. in now in a situation that some call the worst economic state since the Great Depression.
The Fed also made its decision in light of the fact that “inflationary pressures have diminished appreciably” giving the Committee the freedom to lower the federal funds rate to historic lows. It expects the inflation to continue to moderate in coming quarters.
In coming months, the Fed pledged itself to supporting the financial markets and stimulating the economy, which will include buying up mortgage-backed securities and agency debt.
“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Committee promised. “In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”
News of the interest rate move led U.S. stocks to rally with the Dow Jones industrial reaching 359 points by the day’s close, although the Fed change caused the dollar to fall to two and a half month low again the euro.

by Amber Nelson

Equity Loss In American Homes

2008-12-16T23:44:00.000-08:00

I posted recently about the value of homes dropping in the United States. I said in my post that trillions of dollars would be lost this year due to these drops, effectively putting many homeowners under water on their mortgages. Today I did some searching for some figures, and found the stats I was looking for online at Zillow.com. Zillow, a real estate site, has a lot of information for the home buyer and prospective owner. Because I don’t like posting data without facts to back it up, I found that, according to an analysis of recent Zillow Real Estate Market Reports, American homeowners will lost an estimated $2 trillion in value during 2008. The report reveals that home values dropped 8.4% year over year through the first 3 Q’s of the year, as compared to 2007. The report reveals that one in seven of all homeowners, or 14.3%, were underwater by the end of the third quarter. Continuing into the 4th, further falls are predicted.
To date, the estimated value of loss stands at $1.9 trillion through Q3. Dr. Stan Humphries, Zillow’s vice president of data and analytics, said in a statement that “This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values. In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values. On the positive side, in the third quarter, some markets - particularly those hit hardest in the downturn - showed smaller year-over-year declines than in the prior quarter. Our optimism here, though, must be tempered by the knowledge that the larger economic problems that emerged in the fourth quarter will likely further challenge the real estate market.”
This huge loss in equity and the running list of foreclosures, falling prices and a glut of unsold homes on the market is viewed as the biggest barrier to recovery of any kind in the market, both home and abroad. Without a level playing field, there is not much chance that the economy will turn around any time soon. What will be done remains to be seen. Whatever happens, we can rest assured of one thing - the $1.9 trillion that has been lost won’t be recovered. With everything else that is happening in the economy - the troubles in the stock market, the bailouts, the troubles of the Big Three - it will be a very large challenge to resolve. Let’s hope that someone has a plan.

by Alden Smith

Equity Loss In American Homes

2008-12-15T23:46:00.000-08:00

by Alden Smith

Mortgages and Car Loans

2008-12-14T22:55:00.000-08:00

Your credit score really comes into play when you’re in the market for a home or new vehicle. Since the 1980s, lenders have become more sophisticated about using credit scores to evaluate borrowers. This means both good and bad things for you.
The good news is that an increasingly national lending market means that there are programs for people with even checkered credit histories to get home or car loans. Of course, if you have poor credit, you’re going to pay a lot in interest and fees.
The bad news is that lenders are more demanding than ever about personal information from borrowers and—in a cruel irony—the lending process has become a lot less personal than it used to be. Even local banks use mathematical formulas to decide whether they will lend money…and at what cost.
The terms and conditions offered by secured lenders—banks, credit unions and finance companies who lend on things like car and home purchases—vary widely. In this chapter, we’ll consider the details.
As in any market, some lenders offer better rates than others. Even as lenders have become more scientific, the formulas they use can be quite different. Different lenders use different credit score ranges when determining whether to lend to you…and which interest rate to offer. If your credit score is 718, you may be offered the best rate by one company and the second-best by another.
There are also a lot of variables to consider, including—and extending far beyond—the interest rate.

Home Values May Take 50 Years To Rebound

2008-12-13T06:38:00.000-08:00

Many high end homes today are causes for concern in the economic struggle, because their inflated value means that the owners have ended up with an underwater mortgage, and find themselves in the unique position of owing much more than the home is worth. For many years, homes in areas of certain parts of the country, such as SoCal, have been sold for an enormous price as compared to a like home in places like Ohio or Illinois. Some of the tiny cracker box homes I have seen on Dr. Housing Bubble have stunned me due to the price they are asking for them. It may all be about location, location, location, but when you have a market such as we currently have, it doesn’t matter where the home is located.

Home prices hit a historic peak in the spring of 2006. Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn., said “We will never see these prices again in our lifetime, when you adjust for inflation. These were lifetime peaks.” What we have ended up with is people who owe much more on their homes than they are worth, and some of these people are just plain walking away.
One of the reasons that people are in this position is because of highly leveraged loans with little or no down payment. During the boom years, lenders got fancy, and built some pretty innovative mortgages. People were getting into homes for very little money. This was okay when things were going well, but now that the bottom has fallen out, these same people are in a world of hurt. Market values have been stable for nearly a half century following the end of World War II, but really took off from 2002-2006, when the financing got creative.
On average, home values have dropped 17% nationwide. This plunge has wiped out trillions of dollars in home equity. Susan Wachter, professor of real estate at the University of Pennsylvania, is concerned that this loss will drive many families and banks into insolvency. Wachter said “Homes are different than other goods and services. The fragility of our banking system is tied to the value of homes.” The fear is that if housing values do not stabilize that the financial woes will move to other areas - credit cards, car loans and commercial mortgages. There is already evidence of this happening.
The source of my information, USA Today, thinks that it could take 50 years for this to change. In the meantime, all people can do is ride it out and hope for the best. The amount of cash the Fed is throwing at this issue will not really stem the tide. We can only wait to see what will happen when a new administration takes office. I personally do not see much help coming from this quarter, at least not for quite some time. We are in too deep.

by Alden Smith

NAR Predicts Lower Mortgage Rates as Pending Home Sales Stabilize

2008-12-10T19:26:00.000-08:00

The National Association of Realtors is forecasting lower mortgage interest rates into 2009 even though its index of pending home sales has been relatively stable.
According to a release Tuesday, the NAR Pending Home Sales Index slid down just 0.7 percent in October from the previous month and down 1.0 percent from October 2007. The index is based on signed sales contracts and is an indicator of future sales.
“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” said Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”
Regionally, pending home sales were up by 7.8 percent in the South and by 0.6 percent in the Northeast, but those increases were offset by a 4.3 percent decline in the Midwest and an 8.7 percent drop in the West. Still, pending sales in many parts of the country, including the West, are on the rise compared with year-ago figures.

Possible government programs could improve the situation, according to NAR President Charles McMillan. “Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” he said. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”
Yun agreed. “Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he said.
The NAR expects existing home sales to top out at 4.96 million this year, followed by an increase to 5.19 million in 2009 and 5.55 million in 2010.
Based on these forecasts and predictions of U.S. economic growth, the NAR believes 30-year fixed rate mortgage interest rates will fall to 5.6 percent in the first quarter before rising to an average of 6.0 percent by the last quarter. The rate will likely grow to 6.2 percent in 2010.

by Alice Keith

Mortgage Interest Rates Fall on New Rescue Plan

2008-12-10T00:48:00.000-08:00

Interest rates on long-term U.S. home loans fell in the latest week, a reaction to the newly announced Bush administration’s $800 billion bailout package to provide more liquidity for consumer and mortgage debt markets, according to data from Freddie Mac.
“Interest rates for 30-year fixed-rate mortgages fell for the fourth consecutive week as signs the overall economy is flagging lowered most interest rates market-wide,” said Frank Nothaft, Freddie Mac vice president and chief economist. “And economic growth in the third quarter was revised downward this week, led by the first decline in consumer spending since the fourth quarter of 1991 and the largest drop since the second quarter of 1980.”
As a high point, Nothaft noted, “However, declining house prices and low mortgage rates have raised housing affordability in September to the highest level since February of this year, according to the National Association of Realtors (NAR).”
The average rate on a 30-year fixed rate mortgage dropped to an almost two-month low at 5.97 percent, excluding points, during the week ended Nov. 26. Last week the rate averaged 6.04 percent, although one year ago, the rate on a 30-year home loan was lower still at 5.94 percent.
Fifteen-year fixed rate loans carried an average rate of 5.74 percent, a slight increase from 5.73 percent the previous week. Last year at this time, the average rate was 5.73 percent.
One-year Treasury-indexed adjustable rate mortgages fell to 5.18 percent, a decrease from 5.29 percent the week before. During the same week of 2007, the one-year ARM interest rate averaged 5.43 percent.
As interest rates dipped, making mortgage financing more attractive, the Mortgage Bankers Association (MBA) reported that its index of mortgage loan application volume rose 1.5 percent in the latest week, with an increase in home purchase loans offsetting a decrease in refinance requests.

by Amber Nelson

New Record Foreclosures in 3rd Quarter

2008-12-08T23:51:00.000-08:00

A new record was set in third quarter, with mortgage delinquencies up 6.99% from the previous quarter to 6.41% of all loans outstanding. As the economy recedes, these numbers can only go higher. With record number of job losses, companies closing their door, and even The Big Three begging at Washington’s doors, it is no surprise that we see this happening. Without work and only unemployment benefits to sustain them, the average citizen will be lucky to keep food on the table, let alone make a mortgage payment. There appears to be no sign right now of this letting up.

The index that measures these stats was formed in 1979. To put things in perspective, note that from just one year ago, the number of people who is at least one payment behind has risen 128 basis points. This data comes from the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The report was released last Friday.

Total foreclosures rose to a record high at 2.97% in the third quarter. In the previous quarter, it stood at 2.5%, and in Q3 of 2007, it stood at 1.69%. Jay Brinkmann, MBA chief economist, had this to say about the current crisis: “In the last quarter we saw about 575,000 foreclosure actions started, compared with an estimated 580,000 in the second quarter and 535,000 in the first quarter. At this rate we are looking at finishing 2008 at about 2.2 million foreclosure actions started.” Definitely not good news, no matter how you look at it.

The MBA collects its data from a variety of sources - mortgage companies, commercial banks, thrifts, credit unions and others in the mortgage lending field. I don’t think that there is any way that we are near a bottom yet, and many analysts, including Brinkman, agree. Until something is done to stop the hemorrhaging on Main Street, the recession will continue at industrial strength. It is not up to taxpayers to bail these people out, but then again, it is not up to taxpayers to bail out the likes of AIG and The Big 3. If something isn’t done to make this go away, I am fearful that this country is in for very bad times, indeed.

by Klaudia Trun

30 Year Mortgage Rates Hit A 27 Year Low

2008-12-07T23:47:00.000-08:00

We are seeing mortgage rates on 30 year fixed mortgages dropping, and this week they hit 5.53%, the largest drop in one week in 27 years. These rates were reported Thursday by Freddie Mac. The rates are down from 5.97% from last week. The lowest we have seen them was on January 24th, when they stood at 5.48%.
We may see further cuts, if the government decides to launch a plan to lower the rate on a 30-year mortgage to 4.5 percent. They would accomplish this by spending hundreds of billions to buy mortgage-backed securities issued by Fannie Mae and Freddie Mac. Last week, the Fed announced that they were planning to purchase up to $600 billion of mortgage-backed securities and other debt issued by Fannie and Freddie and the Federal Home Loan Banks. Although these institutions do not loan directly to the consumer, they provide money to the mortgage market by packaging loans into investments. The real estate industry is banking on rates dropping even further as the government increases efforts to battle the credit crisis.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., said Thursday that brining industry rates down is a positive thing, but it “doesn’t help people that currently have unaffordable mortgages because it doesn’t help them refinance. Low interest rates help some consumers, but the ones that really need help and can’t refinance are not helped.” You only need to watch the evening news and see the number of jobs being lost nationwide to understand what Ms. Bair refers to. Mortgage rates are now at a point where it would be a good idea to refinance. However, if you are in a mortgage that6 is under water, as a great many Americans are, then it does you little good, no matter how low mortgage rates go. Federal Reserve Chairman Ben Bernanke himself said that “the mortgage market is dysfunctional.” If this is the case, coming from a top Fed, then we will not see any relief for troubled homeowners.
Treasury yields, one of the best barometers of investor sentiment, have dropped off to lows this week that ride on dismal economic outlook. With Treasury yields dropping, people saving for retirement or are in retirement take a hit. Those looking to borrow have a much brighter outlook. Riding on the news, new mortgage applications more than doubled last week. Seventy percent of all applications were for refis. Rates on other mortgages are also dropping.

We need to see a bottom before we have any idea of where we really stand. Although it feels good to see rates dropping, it does not show us yet where the consumer really stands. Much controversy surrounds the bailouts still. A lot of unhappy consumers are out there, facing foreclosure and bankruptcy. It will be interesting to see where the Fed takes us next.

by Cris Marker

Buying A Home

2008-12-04T23:03:00.000-08:00

Buying a home is one of the biggest investments you will ever make. In addition to finding the right home at the right price, you also need to find the right financing.
Whether you are a first-time homebuyer or a seasoned investor, finding the right loan can be a difficult process. Where should you start? What is the right loan for me? Who has the best rates?

Find the Right Loan

The right loan for you will often vary based on your particular situation and your financial goals. There are many loan options available:
Fixed rate loans - Lock in a low fixed rate that is guaranteed to never change. Popular terms include 15, 20, 30, and 40-year loans.
Adjustable rate loans - Flexible loan terms for your short-term goals.
Low down payment loans - Buy property with less than 20% down.
FHA loans -Guaranteed by the government, FHA loans offer low down payment options and more flexible guidelines than traditional mortgages.
Vacation and investment loans -Loans specialized for the mortgage investor.

Prime Mortgages Showing Signs Of Trouble

2008-12-04T04:32:00.000-08:00

Although a great deal of the problems facing the mortgage market is focused on subprime, it is noteworthy to see that even prime mortgages are showing the strain. In 1985, primes facing foreclosures stood at 1.97%. Now, we are seeing 3.07% of prime mortgages that are either in foreclosure or are at least 60 days late nationwide. This rate has jumped since end of second quarter.
California is especially hard hit. Unemployment there stands at 8% and rising, and home values have dropped by at least 40%. And in California, the figure for homes facing foreclosure stands at 4.215% seriously delinquent. Experts blame this situation on the loss of jobs and the tight financial market, where it is next to impossible to get a line of credit to help with delinquent mortgages. Besides, with mortgages being under water, the equity line of credit has disappeared.
It appears that the prime mortgages are tumbling even faster than the subprimes did. In August, more than 43% of subprime loans nationally were in foreclosure or at least 60 days late. This was almost double of what it was in August of 2007, according to First American CoreLogic’s Loan Performance, which tracks about 82% of home mortgages. One thing that is troubling is the fact that 7.5% of these prime loans are the so-called jumbo loans - loans to big for Freddie Mac or Fannie Mae to handle. This figure is three times what it was at this time last year, according to CoreLogic.
With the news tonight that the Fed is bailing out CitiGroup, it will be interesting to see what is done regarding these loans that are in trouble. Restructuring is the only sensible action, but so far that plan has not seemed to work well. Stephen C. Levy, director of the Center for the Continuing Study of the California Economy, had this to say: “The only practical help in sight is to get as many of these potential foreclosures modified as possible, so they come off the market. We should be really worried.”

by Kevin Wait

Mortgage Demand Up 112.1 Percent As Interest Rates Fall

2008-12-03T20:33:00.000-08:00

The volume of U.S. mortgage applications shot up dramatically in the latest week as borrowers sought to take advantage of low interest rates, according to the Mortgage Bankers Association Wednesday.
“Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when the GSEs were placed under conservatorship,” said Orawin Velz, associate vice president of economic forecasting for the MBA. GSE stand for government-sponsored enterprises, meaning mortgage companies like Freddie Mac and Fannie Mae.
“When rates plummeted following the Fed’s announcement that it would buy GSE debt and MBS [mortgage-backed securities], many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they began to rebound.”
The MBA’s weekly application index skyrocketed up 112.1 percent to a seasonally adjusted 857.7 during the week ended November 28, 2008, from 404.4 the previous week.
Both refinance home loans and home purchase mortgages increased in popularity, but the newly lowered interest rates made refinance applications jump by 203.3 percent while home purchase applications rose by just 38.0 percent. This growth in demand shifted the refinance share of total applications up to 69.1 percent, an increase from 49.3 percent the week before.
The rise in refinance demand was due in large part to lower interest rates, as struggling homeowners seized on the opportunity to get out of expensive adjustable rate mortgages.
The MBA reported that the average interest rate on a 30-year fixed rate loan fell to 5.47 percent during the latest week, excluding points, from 5.99 one week earlier.
Rates on fifteen-year fixed rate mortgages dropped to 5.13 percent from 5.78 percent the previous week, while one-year adjustable rate mortgages averaged a rate of 6.61 percent, down from 6.87 percent the week before.

by Alan Wint

A Resistance To Change

2008-12-02T23:33:00.000-08:00

It was bound to happen. Sooner or later, an investor would question the validity of the mortgage bailouts for people who are in default on their mortgage. Now we see an investor, William Frey, filing a lawsuit in New York State Supreme Court alleging that the proposed modification of some 400,000 home loans originally underwritten by the defunct lender Countrywide Financial is illegal. Allegedly, the lawsuit, which is a class action, states that Countrywide and Bank of America have no legal standing in which to modify these loans to make them affordable. The lawsuit further alleges that these mortgages are owned by trusts that bought them through securitization.
Frey states that the modification of these loans will short bondholders $8.4 billion by reducing borrower payments. He claims that this will run the risk of permanently damaging the secondary market for housing finance.
In an interview, Frey had this to say: “I am an advocate for investors’ contractual rights. Investors’ voices have been muted in this debate because they speak of an inconvenient truth: Current solutions sacrifice the long-term viability of this nation’s housing finance system for short-term political gain. No matter how noble the intent, it is not in the interest of the United States now, or in the future, to tell its citizens and the world at large that U.S. contract rights may be bent with the political winds.”
Sherry Norton, a BOA spokeswoman, had this response: “We have not yet received a filing and, therefore, we cannot comment on specific claims. We are, however, disappointed in this attempt to halt a program intended to keep as many as 400,000 at-risk families in their homes and, together with similar programs across the industry, stabilize the nation’s housing market. We are confident that together with the attorneys general we have built a program that benefits both consumers and investors, whose interests we carefully considered in developing our program.”
Frey feels that it is up to taxpayers to pony up another $500 billion to buy all of the troubled loans from mortgage-backed securities pools. Each side has its own argument. Investors feel that BOA is taking advantage of the current situation because they will pay for modifications out of bondholder money. It does not sit well with investors.
However you shake it out, money will be lost to someone. Tonight the evening news reported that it is now official - we are in recession - deeper than we were in 1932. Everyone is frantic about their financial situation. It will be interesting to see how this will play out. The investors have a valid point. Try telling that to the people who are facing foreclosure.

by Alden Smith

Looking At The Mortgage Industry

2008-12-01T02:41:00.000-08:00

If you have been around the mortgage industry for very long, you are aware of Robert Shiller. Shiller, a well-known economist and professor at Yale University, is predicting that the current financial crisis could go on for a good number of years. This is probably more reality than we really care to look at.
I looked at some figures and statistics before making this post to see what kind of list I would come up with concerning troubled entities and businesses. Here is what I find:
Even though we see the greatest rally in the stock market since the Great Depression, the Dow is down 34%, S & P 500 is down 39%, and the NASDAQ is down 42%. None of this rally is fueled by good retail sales, less unemployment or higher than expected earnings.
The GDP came in at -0.5 when the market expected -0.3. Consumer confidence is at an all time record low.
Citigroup has become another big corporation to receive bailout money. The Fed is now not only in the banking industry, as are taxpayers, but we are now also a nation of insurers, with the hand out to AIG.

We have heard much about Freddie and Fannie, yet most news points to where they are not making the grade.
Debt from this process is running in the trillions. When you talk about printing more money, what is the standard that backs it up? Failed securities and paper not worth the ink on it? Remember the gold standard? Do we leave it to further generations to figure this out?
Looking at these things, and many more, we can see why Shiller states that “I think that we want a new deal now, something that makes fundamental changes in our financial institutions, and I think, ultimately, that is the kind of thing that will work best to restore confidence.” One would hope that at some time soon, someone begins to listen to Shiller. There is no light at the end of the tunnel as of yet.

by Alden Smith

What is mortgage refinancing?

2008-11-30T01:57:00.000-08:00

Mortgage refinancing is the paying off one real estate mortgage loan with another mortgage loan. There are two types of mortgage refinance transactions. The first type of mortgage refinance is where the first lien on a property is paid off, and less than $2,000 of equity is taken out of the property by the borrowers, either as cash, or to pay down or off other debt, such as a HELOC, credit cards, etc. This type of mortgage refinance is also known as a rate and term mortgage refinance. Closing costs are excluded from the $2,000 and often may be rolled into the refinance.

The second type of mortgage refinance is known as a cash-out refinance. This is where over $2,000 of equity is taken out of the property by the borrowers, either in cash, or to pay down other debt. Taking out a either a second mortgage, home equity loan or line or credit at a time after the first mortgage is taken out is also considered a cash out refinance from the lender's perspective.

What are the benefits of mortgage refinancing?

2008-11-30T01:56:00.000-08:00

One benefit of refinancing your mortgage is to lower your mortgage payment. Another is that borrowers can borrower money against the equity in their home at a lower cost than they can from other sources, such as credit cards, or car dealerships. A third benefit to mortgage refinancing is that if you pay off credit cards, the interest you pay on that money will now most likely be tax deductible, as is most mortgage interest.

Fixed-rate mortgages have stabilized over the last few months. Get the latest interest rate outlook report from RealEstateABC.com.

What is a mortgage rate?

2008-11-30T01:51:00.000-08:00

A mortgage rate is the rate of interest rate you pay on money you either borrow to buy a home, or a rate you pay on a second mortgage, or home equity loan when you borrow money against your home. You can get either a fixed mortgage rate or a variable mortgage rate. Fixed mortgage rates remain constant throughout the entire tem of the loan, whereas a variable mortgage rate may change multiple times throughout the life of the loan.

Both fixed mortgage rates and variable mortgage rates are determined by economic conditions, and are normally tied to some index, such as a government security.

What is the best mortgage rate for my needs?

2008-11-30T01:50:00.000-08:00

A mortgage rate, when you purchase a home is determined by both economic conditions, and the type of loan program that you choose. The first thing when you look for a mortgage is to determine how long you intend to own the property. A variable rate mortgage will usually have a lower mortgage rate than a fixed rate mortgage and will save you money while you own the property, by giving you lower monthly mortgage payments.

What are the benefits of getting a better mortgage rate?

2008-11-30T01:48:00.000-08:00

There are several benefits to having a better mortgage rate. The most obvious benefit is that a lower mortgage rate will result in a lower mortgage payment. Another benefit is that you can handle a higher loan amount than you could at a higher rate.

In fact, if you can handle a higher mortgage payment, the rate on a 15 year fixed rate mortgage is normally lower than the rate on a 30 year fixed rate mortgage, and you could save thousands of dollars in interest over the life of the loan.

Resources when looking for a fixed rate home equity loan or HELOC

2008-11-30T01:42:00.000-08:00

Nowmortgage.blogspot.com wants to make your search for a fixed rate home equity loan or variable rate HELOC as straightforward as possible for you by arming you with the tools that will help you to make informed choices when looking for a fixed rate home equity loan or HELOC. These tools include:

The Borrower's Bill of Rights - Our Borrowers Bill of Rights helps you avoid unethical lenders and get the most from ethical lenders.
Truth about Loans - Our in-depth library of helpful articles tells you what to expect at every step of mortgage process.
The Ethical Lender Rate Directory - The Truth about Loans section allows consumers to search for mortgage rates while at the same time flagging those mortgage lenders that abide by the Borrower's Bill of Rights and are in good standing with the Better Business Bureau.

Do your homework and think twice before signing. Refer to the FDIC (Federal Deposit Insurance Corporation) website for more information on home equity loans, and also check out RealEstateABC's interest rate outlook report.

What are the benefits of having a fixed rate home equity loan or HELOC?

2008-11-30T01:40:00.001-08:00

One benefit of taking out either a fixed rate home equity loan or HELOC on your property is that the interest on debt you pay off, such as credit cards is now usually tax deductible. The interest rate on the home equity loan or HELOC is usually lower than the interest rate on credit card debt.

Another benefit of taking out a fixed rate home equity loan or HELOC is that it is sometimes an interest only loan, meaning you are only paying off the interest, giving you a lower payment each month. Check the rates on both fixed rate home equity loans and lines of credit when determining what is best for your situation.

Read the fine print when looking for a fixed rate home equity loan or HELOC.

Always understand the terms of either a fixed rate home equity loan or variable rate HELOC when shopping for either. Be aware of the maximum interest rate you can pay, and know about prepayment penalties. Lenders of these types of loans usually get a fee either at closing, or when the loan gets paid off early, so make sure you know the terms.

When should I get a fixed rate home equity loan or HELOC?

2008-11-30T01:36:00.000-08:00

Homeowners typically take out fixed rate home equity loans, or HELOCs in one of several cases:

A homeowner could take out a fixed rate home equity loan or HELOC to consolidate debt, usually higher rate debt, such credit cards with high interest rates.
A homeowner could also take out a fixed rate home equity loan or HELOC to use as a down payment on either a second home or an investment property.
A third reason that a homeowner would take out a fixed rate home equity loan or HELOC would be to use a second mortgage, along with a first on a home purchase or refinance.
Make sure a home equity loan is the right option for you. The University of Illinois has listed out the advantages and disadvantages of home equity loans. Compare them here.

Mortgage loan resources

2008-11-30T01:24:00.000-08:00

Nowmortgage.blogspot.com wants to make this as straightforward of a process as possible for you by arming you with the tools that will help you to make informed choices. These tools include:

The Borrower's Bill of Rights - Our Borrowers Bill of Rights helps you avoid unethical lenders and get the most from ethical lenders.
Truth about Loans - Our in-depth library of helpful articles tells you what to expect at every step of mortgage process.
The Ethical Lender Rate Directory - The Truth about Loans section allows consumers to search for mortgage rates while at the same time flagging those mortgage lenders that abide by the Borrower's Bill of Rights and are in good standing with the Better Business Bureau.

Read the fine print when looking for a mortgage loan

2008-11-30T01:23:00.000-08:00

Always read and understand the documents associated with your mortgage loan while going through the process. Have either an attorney or other trusted advisor with you, if needed, when signing mortgage loan documents.

Option ARMs, and specialty mortgage loans are best suited for borrowers that know how to use them. An example of this is someone owning an investment property that they absolutely know they will be selling in a few months. Always compare mortgage loan fees between lenders when shopping for a mortgage loan. Please visit the Fannie Mae website for more information on loan limits, on both first and second mortgage loans.

Benefits of a mortgage loan

2008-11-30T01:21:00.000-08:00

There are many benefits to having a mortgage loan. Having a mortgage loan means you own a home, and can build equity. Equity simply means the difference between the value of a property, and the amount you owe on the mortgage loan.

The interest on a mortgage loan is often tax deductible, saving you money. Having the ability to take out a second mortgage loan on your property gives you access to your equity. As mortgage rates change, you can refinance your mortgage loan to get a better rate.

In what situation is a mortgage loan used ?

2008-11-30T01:19:00.000-08:00

A mortgage loan can be used by anyone buying or refinancing:

A primary residence
A second home
An investment (rental) property, also known as non-owner occupied.

The first step in the mortgage loan process is to determine how long you intend to keep your property. Mortgage loans with initial fixed interest periods (2/1 ARM, 3/1 ARM, etc.) typically carry lower rates than 30 year fixed mortgage loans, giving a lower payment to someone planning to own a property for a shorter period of time.
Use RealEstateABC's ABC Values tool to check your properties' current home values.

What are fixed rate home equity loans and home equity lines of credit (HELOCs)?

2008-11-30T00:52:00.000-08:00

A home equity loan is a loan that you take out against the value of your home.
A home equity loan can be either a fixed rate equity loan, or a variable rate (sometimes fixed rate) equity line of credit, or HELOC. In either case, the term of the home equity loan is fixed, usually at 10 or 20 years.
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Resources when looking for either a mortgage rate a new mortgage rate

2008-11-30T00:49:00.000-08:00

Nowmortgage.blogspot.com wants to make your search for a mortgage rate as straightforward as possible by arming you with the tools that will help you to make informed choices when looking for a mortgage rate. These tools include:

The Borrower's Bill of Rights - Our Borrowers Bill of Rights helps you avoid unethical lenders and get the most from ethical lenders.
Truth about Loans - Our in-depth library of helpful articles tells you what to expect at every step of mortgage process.
The Ethical Lender Rate Directory - The Truth about Loans section allows consumers to search for mortgage rates while at the same time flagging those mortgage lenders that abide by the Borrower's Bill of Rights and are in good standing with the Better Business Bureau.

When should I refinance my mortgage?

2008-11-30T00:48:00.001-08:00

Homeowners typically refinance their mortgage for one of three reasons:

The first is to get different terms than their current mortgage loan offers, i.e. a lower refinance rate, fixed rate, mortgage payment amount, etc.
The second reason to go through a mortgage refinance is to leverage the equity in your home. This can mean either consolidating debt into one loan, or extracting equity in the home for other purposes.
A third reason that a homeowner might want to refinance is that they have a balloon mortgage loan on their home that is coming due.
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What is a mortgage loan ?

2008-11-30T00:40:00.000-08:00

A mortgage is a loan that a person takes out in the process of buying a home. A mortgage loan can have a fixed rate, an adjustable rate, or a combination of the two. A fixed rate mortgage loan means that the rate is the same for the entire term of the mortgage loan. An adjustable rate mortgage means that the rate could change over the life of the loan, causing the payment to change.

Fixed rate mortgage loans typically have terms of 15, 20, and 30 years. Adjustable rate mortgage loans typically have terms of 30 years, but only a part of that term is fixed, say perhaps, 2, 3, or 5 years.