Home Loan Focus

Archive for the ‘mortgages’ Category

Politicians might talk about a fixed 4% mortgage rate, but so far it is shaping up to be nothing but talk.  Their lack of real action to improve the countries finances, restore confidence to the finance and real estate markets and their poor showings in past results with the TARP have fueled the market to increase actual interest rates to a 6 week high of 5.7%, almost 2% higher than the fairy tale levels of 4%.

The average 30-year fixed mortgage rate rose to 5.70% from 5.48% for the week ended Feb. 4, according to Bankrate.com. The average 15-year fixed rate mortgage increased to 5.31% from 5.10%, and the average jumbo 30-year fixed rate jumped to 7.12% from 7.06%. Adjustable rate mortgages were mixed over the past week, with the average 1-year ARM falling to 5.73% from 5.87% and the 5/1 ARM increasing to 5.5% from 5.41%.

Mortgage rates rise to highest in six weeks – Feb. 5, 2009

Politicians seem to caught up in their fight over a stimulus package that doesn’t appear to have any stimulus in it at all.  Simultaneously, the weekly number measuring the people that became unemployed rose again this week to 626,000 people in a single week.

We currently have more unemployed people in total in the United States than we have ever had in the nations history.

The latest rise in mortgage rates seems to rest squarely on the shoulders of the Federal Reserve and Barack Obama for signing on to the Nancy Pelosi stimulus plan.

Mortgage rates have been climbing since the Federal Reserve released its most recent post-meeting statement on Jan. 28, which was noncommittal about the possibility of buying long-term Treasury securities in an effort to reduce mortgage rates.

But offsetting that move is the government’s massive stimulus plan, which is being paid for via Treasury auctions.

cnn

The last step in the 3 steps to improve our mortgage rate is to improve your loan-to-value ratio. A prospective borrowers loan-to-value ratio is figured by dividing the amount you want to borrow by the price of the home you wish to buy. For instance, if you want to buy a $200,000 dollar home and you want a mortgage of $180,000 dollars, your LTV would be 90%.

Most lenders prefer an LTV over 80%. If your LTV is under 80%, a lender will likely insist that you purchase private mortgage insurance for the loan. In order to improve an LTV ratio, a borrower can either increase their down payment or choose a less expensive home to purchase. Unfortunately, a large down payment is like a colon cleanse for your savings, but it will definitely be beneficial in the long-run.

Source: Credit.com

In order for a mortgage lender to determine how much you can afford to borrow, they will look at your debt-to-income ratio. This number is determined based upon your pre-tax income divided by the amount you use to pay off credit cards, student loans, auto loans etc. Keep in mind that your credit card payment is determined as the monthly minimum not the total balance.

A borrowers debt-to-income should be under 30% in order to assure favorable terms on a mortgage. If your DTI is too high, you should consider paying off some of your smaller loans or perhaps pay down your credit cards, focus on large items like airplane tickets and electronics instead of Halloween decorations or sexy costumes. Be sure not to close any of your credit cards because this will lower your credit score. Another way to improve your DTI you can have a spouse co-sign on your application. A co-signer will increase your total income thus improving your DTI.

Source: Credit.com

There are many ways to improve the odds of receiving a favorable mortgage rate. We all know that lenders are going to check all three of your credit scores (Equifax, Experian, and TransUnion). It is extremely important to know exactly what your score is on each of these three reports. If you have a score above 650, you will most likely receive a decent mortgage rate, but if your score is higher than 750 your rate will be even lower.

In order to increase your credit score quickly, there are a number of steps you can take to improve your rating.  Keep in mind, that you should check your credit scores at least 3-6 months prior to applying for a mortgage to allow enough time for your “fixes” to take.

To help increase your credit score, these steps can start you down the road. First, it is recommended that reduce your card balances below 35% of your total credit limit. Second, keep your accounts stable, make timely payments and avoid unnecessary applications for credit. Lastly, correct any inaccuracies that may be on your reports, you don’t want to be paying for auto parts, expensive dinners and vacations you had nothing to do with.. Be sure to be proactive in regards to your credit, sometimes someone else’s clerical error can be the difference between a good rate and a great one!

Source: Credit.com

Private mortgage insurance or PMI is an insurance policy that protects your lender in the event of default. 99.9% of lenders will require that you obtain PMI if you have less than an 18-20% deposit. Unfortunately, the premiums are not always tax deductible like mortgage interest. 

There are many ways to get out from under PMI. The best way to do this is to pay down your mortgage is by making small additional payments monthly. You can save a great deal of money over time by getting your loan-to-value ratio under the 80% mark. In addition to paying down your loan gradually over time with additional payments, you can avoid the whole PMI situation by saving up some cash and putting down 20%. Think of that deposit as acne treatment cream for PMI.

Source: themoneyalert.com

There are many factors to consider when applying for a loan. It is important for a borrower to examine their financial standing as well as ability to pay back the loan. Lenders are likely to qualify you for more than you will need, so it is up to you to determine how much you can truly afford. It is important to factor in insurance, taxes and possible association dues while calculating this figure.

Not only is it important to shop potential lenders, but it is also important to shop loan costs including interest rates, credit and origination fees as well as terms. It is vital that a borrower take their time during the application process and be able to produce documents to back up their application information. You don’t need Lasik to see that some of the greatest opportunities can bust over failure to produce a pay stub or divorce decree.

Source: Move.com

The real estate market is bursting with opportunity for first time homebuyers with good credit and a handful of cash, but without a pre-approved mortgage a buyer could be out in the cold. If you’re in the market to hire an agent and go house hunting, an agent might have second thoughts showing you property you have no way of proving you can afford. Furthermore, a homeowner might have qualms about signing an offer presented by a potential buyer who is lacking proof of financial means.

It is essential to interview with potential lenders who will verify your credit history and will give you an official preapproval letter stating how much you qualify for. The preapproval process is also a necessary process for homebuyers seeking third party finance, so buyers are encouraged to apply prior to visiting agents of making serious offers. Besides, anyone can throw numbers out there and/or make promises without being able to back them up. If you wouldn’t mess around when you are buying a multivitamin or Phentermine, why would you mess around when looking to buy a home? The only way to be taken seriously is to have a letter of preapproval from a lender.

Source: Ringsurf.com

If you are ‘fortunate’ enough to own a home that has a value less than $417,000, then you have better than even odds that your home actually is still increasing in value. 

That is because home prices in 56 percent of metropolitan areas, which include 292 cities did increase in the first quarter this year.  What’s the caveat?

The increase in home prices is only happening for homes that are not subject to jumbo loans of $417k or more.  So if your home when sold does not require jumbo financing, then you might still see your home continue to appreciate.

We hear a great deal about home prices coming down, but this is largely because the total numbers are significantly skewed by homes that cost between $500k and $1.5 million.  These are also the homes that have been hit hardest for foreclosure.

To top things up, there are still some markets that are appreciating significantly.  So if you are looking to sell this year, all is not lost.  It may not be a sellers market, but at least you won’t feel like your price has been completely squashed like a fly under a stack of books.

Some markets are appreciating strongly, such as Austin (up 7.7 percent in the past 12 months), Grand Junction, Colo. (up 9.1 percent), Charlotte (up 6.2 percent), and Provo, Utah (up 6.8 percent).

Washington Post

The US has hit a need velocity in foreclosure rates.  There are currently 1 million homes in the que going through the foreclosure process.  This is not a reference to total foreclosures since the housing crisis. This is just the current homes pending foreclosure.

This is definitely a dubious milestone in the housing and mortgage crisis and one that is going slightly unnoticed while Oil is spiking close to $140 a barrel with predictions of hitting $150 before the Fourth of July.

If gas rates hit $5 or $6 per gallon this summer, it sure will not help any of the unfortunate homeowners trying to save their homes from foreclosure. It won’t even help the banks trying to minimize their losses, and it definitely won’t help banks offer new loans to people to buy homes and help the market actually begin to hear.

There was a time when it appeared that the mortgage crisis might abate and markets could recover within a year or two. We are now coming up on what some would consider the one year mark, things are rapidly getting more desperate and the solutions put forward so far . Possibly even more troubling could even be the number of people that are beginning to give up on entering or staying in the housing market. With potential homeowners actually leaving the marketplace and opting to rent instead, the housing market will continue to contract faster than waistlines trying to determine the answer to the question does Hydroxycut work.

For months the Federal Reserve has been cutting the rates that banks pay to borrow money, but this month those drops only translated to about 0.125 percent.  Banks would seem to be pocketing the difference to either pay for their past losses or to try and lure investors back into the mortgage backed security market with higher yields.  You might hope for a better rate, but you’ll be doing good to get approved for a loan let alone a gift baskets the way things are going in the mortgage market these days.

The average rate on a 30-year U.S. mortgage with no upfront points declined 1/8 percentage point to 6-3/8 percent on Monday, according to BestInfo Inc.

The 30-year mortgage rate with one upfront point dropped 1/8 percentage point to 6-1/8 percent.

US mortgage rates drop 1/8 pt on Monday