Mortgage ABC

Bank of America Promotes No-Fee Mortgage

Tue, 08 May 2007 20:22:03 -0800

Is it no fee, or no cost? Apparently, Bank of America is burying much of the cost to interest rates. Clever move BofA!

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Freddie Mac: Housing Worst Isn't Here Yet

Sat, 28 Apr 2007 16:03:43 -0800

I would be too naive to think the cumulative effect of many years' of reckless lending has already been unwound. How will this affect the economy in the next few years when the Class of 2006 faces graduation?

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Review: Credit Demystified

Mon, 02 Apr 2007 07:53:58 -0800

CreditDemystified.com. This credit education web site, backed by Countrywide Home Loans (Countrywide is one of the largest mortgage product provider in the nation), includes the following sections: 1) How to Improve One's Credit: Information regarding credit repair, credit counseling, and whether one should consider bankruptcy. 2) Credit Learning Center: Introduction to different types of loan products, and especially, how mortgage loan process works. 3) A 10-question Credit Intelligent Quotient test that only takes 5 minutes to complete (and I got a perfect 10!) 4) Introduction to Credit Scores: Explains credit bureaus, credit reports and FICO scores. 5) Introduction to Home Loans: What is fixed rate mortgage, what is adjustable rate mortgage, and what is combination rate mortgage (if you are not familiar with this term, you are not alone. It is actually hybrid loans with a number of years of fixed rate, accompanied by adjustable rate, like 5/1 ARM, 7/1 ARM, etc.) It is not a surprise that CreditDemystified.com does have its commercial purpose, though. For one, Countrywide Home Loan's toll free number is prominent in every single page. The only weakness of this site, perhaps, is in its domain name. I'm not sure how many people can spell demystified correct, and even for those who can, CreditDemystified.com is certainly not an easy domain name to remember. (While the above is a sponsored post, PFBlog is not required to provide a favorable review. Quality time was spent to study the subject website in completing this post to provide an independent opinion.)]]>

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Review: Credit Demystified

Mon, 02 Apr 2007 07:53:58 -0800

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An Imperfect Mortgage Calculator

Sun, 04 Mar 2007 23:38:47 -0800

online mortgage calculator. Unfortunately, it didn't do its job too well. Like other mortgage calculators, this one asks for your loan amount, interest rate and term (number of years). It also goes one step further by asking you to estimate your property tax and PMI (private mortgage insurance) ratio. As a result, the calculator will show you the monthly payment you can expect, the total value of payments, total interest to be paid throughout the life of the mortgage, and the full amortization schedule. As part of the output, there are a few nicely drawn charts showing you the relative percentage of principal, interest, tax and PMI in your payment, and your mortgage balance over time. However, this mortgage calculator is quite detached from reality in several aspects: First, Private mortgage insurance (PMI) usually only applies when one's loan-to-value (LTV) ratio is above 80%, and banks are required to drop PMI once your LTV drops to below 78%. Therefore, it is almost inconceivable that one will carry PMI throughout the 15 years or 30 years of a mortgage. Second, the calculator asks you to estimate your property tax as a percentage of loan amount. Usually, property tax is a percentage of total value of the underlying property, and therefore, an uninformed user may put a wrong percentage here, which will in turn lead to inaccurate results. Third, the calculator labeled the monthly payment in the output as "Monthly Principal & Interest," which, according to my calculation, also includes property tax and PMI payments. It is quite some confusion that can be easily avoided. Conclusion: Nice try on the graphic effects, but there are quite a few better mortgage calculators out there. (While the above is a sponsored post, PFBlog is not required to provide a favorable review. Quality time was spent to study the subject website in completing this post to provide an independent opinion.)]]>

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Some Nice Loan Calculators

Sun, 04 Mar 2007 20:51:17 -0800

iloancalculator.com particularly useful. These calculators cover some very typical scenarios when you need to get some hard numbers to back your choices. Here are a glance of some useful calculators: 1) Accelerated Mortgage Payoff Calculator: find out how you can pay off a mortgage early, and how much paying off early will save. 2) Bi-weekly Mortgage Calculator: find out how much faster you could pay off a mortgage by dividing your monthly payments into two, paying every two weeks rather than every month. 3) Auto Loan vs. Home Equity Loan Calculator: figure out whether an auto loan or home equity loan will be cheaper, after accounting for the closing fees of home equity loan. 4) Debt Consolidation Calculator: figure out how much time and money you can save by "consolidating" a credit card balance--or multiple credit card balances. 5) Credit Card Payoff Calculator: see how long it will take you to pay off a credit card balance at the rate you are making monthly payments and charges, and see how much faster (or slower) you could pay off that balance by making larger (or smaller) monthly payments. 6) Lease vs Buy Auto Calculator: find out how much buying a car and leasing a car will actually cost, and which is truly the better value. While online calculators are not scarce resources, what makes the loan calculators at iLoanCalculator.com particularly useful is it provides easy-to-understand explanation of relevant concepts with each calculator, and graphical presentation of the results. Finally, here are some quick (and somehow surprising) facts generated by some calculators at iLoanCalc: 1) For a credit card balance of $5,000 at an interest rate of 18%, it will take more than 30 years to pay it off if you stick to the minimal payment of $100/month. 2) For a 30-year mortgage at 6% interest rate, one can save 5.4 years by using a bi-weekly payoff schedule. For a principle amount of $100,000, that's a saving of over $24,000 over the life of the loan. While the above is a sponsored post, PFBlog is not required to provide a favorable review. Quality time was spent to study the subject website in completing this post.)]]>

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Mortgage Defaults Are Climbing For Alt-A Customers

Sat, 03 Mar 2007 19:01:49 -0800

Woo ... it looks like the housing market slowdown and default nightmare for mortgage underwriters will be worse before getting better. If these Alt-A customers are turning in 2.4% delinquency rate, there is no wonder why my person-to-person lending experience at Prosper.com is abysmal.

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Bad Credit? You Can Still Get A Home Equity Loan

Fri, 24 Nov 2006 23:14:07 -0800

When you choose to apply for a loan with bad credit your options are very limited. If you happen to find a lender willing to approve your loan, you’ll have to pay higher interest rates. Bad Credit Personal Loans are prohibitive due to the fact that lenders don’t have any asset securing the loan so the rate is calculated based on your personal credit. Lower credit scores get higher interest rates among with other costs. When your credit report is pulled, if there are too much stains on it, a lending institution will assume you’re a high risk customer and act accordingly either denying you the loan or charging exorbitant interests to compensate the risk. Offering a co-signer can sometimes solve this problem. The co-signer’s credit score will also be taken into account and might reduce the interest rate charged and get you approved. However, for unsecured loans, it is not always enough. The solution: Home Equity Loans Home equity loans are an excellent option for those dealing with a bad credit situation. Since these loans are secured on the equity of your home, the interest rate will be based mainly on the value of the outstanding equity and thus your credit score will not be such an issue. The rates you’ll get from a Home Equity Loan will be considerably smaller compared with unsecured personal loans, credit cards and payday loans. There are also very flexible repayment programs associated with this kind of loans. You can even get a line of credit so you can get the money when you need it. Moreover if you choose a variable rate the amount paid on interests will be reduced as well as if you select a shorter payment schedule. Consider all your options before opting for one loan. There is no rush and it would be wise to do a thorough research before making a decision. Avoid Overpaying Don’t jump in to the first offer, do your research and pay special attention to fees and costs. Sometimes you may think that certain loan has a very convenient interest rate but the truth is the lending company can be compensating that small rate with huge fees and other costs that will be charged and you may en up paying a lot more than you would have paid with a loan at a higher rate. Thus, you should request loan quotes from as many lenders as possible so you can get an idea of what the average APR and the typical fees and costs are. With this info in hand you can compare rates, fees and costs and see which is the best deal for you. Only then should you apply for a home equity loan.

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Getting $250 for NOT Banking with Bank of America

Wed, 01 Nov 2006 12:43:11 -0800

This sounds like an easy way to get some petty cash for your downpayment. As far as I know, Bank of America has never been competitve in mortgage rates. I have to admit this is a risky move for BofA.

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Home Prices Keep Sliding

Fri, 27 Oct 2006 04:29:06 -0800

Wall Street Journal summarizes the current status of the housing market. It appears that things can get worse before they get better. Seattle's housing market remains strong, which makes it hard to assess whether my decision in late 2005 to sell my house is wise marketing timing or not.

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How PMI Premiums Are Decided

Fri, 20 Oct 2006 03:41:45 -0800

Perhaps the best advice for PMI is to avoid one, either through savings toward a larger downpayment, or using piggyback loans to bypass PMI.

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Major Private Mortgage Insurance (PMI) Options

Fri, 20 Oct 2006 03:38:45 -0800

Bankrate's Amy Buttell Crane explains that there are three options when you cannot pay 20% of home price as downpayment. Obviously, piggyback loan is usually a better (read: cheaper) option than the other two.

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Red Flags Of Mortgage Fraud

Sun, 15 Oct 2006 02:38:11 -0800

Taking a mortgage is probably the largest financial transaction you have in your life, and you should pay extra attention to these potential red flags:

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Your Can Deduct Costs Of Refinancing!

Sat, 14 Oct 2006 20:04:34 -0800

Do you know on top of a low interest rate, you can also get some tax benefits by properly deducting cost associated with a refinanced mortgage? Here comes IRS Tax Tip 2006-55.

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ARM Holder Beware: The Mortgage Time-Bomb Is Ticking

Tue, 10 Oct 2006 04:57:27 -0800

Although things will turn bad before they turn good, if you just sign up for 3-year or 5-year adjustable rate mortgage, you may want to wait out the storm. After all, the interest rate may have peaked, and in 3 years time it will be a much better time to refinance.

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A Brief Introduction To UK Secured Loans

Mon, 09 Oct 2006 01:07:47 -0800

Secured loans in the UK enable homeowners to borrow money against the value of their property. For homeowners, secured loans are the best loan option to look for their financial needs. There are many benefits of availing secured form of loans, which makes it economical for the borrowers. Secured loans are secured against the property or house of homeowners. This means, borrower has to offer his house or other property to lender as collateral against the loan amount he is taking. This loan keeps lender at no risk, and they, therefore, provide loan at easy terms and conditions. Borrowers property, although, is at risk, if they fail to pay back the loan on time, and according to terms and conditions. But, this one disadvantage is not even a bit comparable to the several benefits, it offers to borrowers. For homeowners and property owners, secured loans are the easiest loan to avail, as it requires mere some kind of collateral, and house serves as collateral in best way. Stiff competition in the UK loan market has made secured loans to be availed much more easily. What borrower needs is to find out a best lender who can offer him the loan at easiest terms to meet his loan requirement in better way. Online lending has come to its age in UK, as they are proving to be a very good source of availing all kind secured loans, as well as offering variety of information and advice on loans. As the secured loans are collateral bound loans, borrower can even get higher amount depending upon value of his property. Moreover, borrower carrying bad credit can also avail the loan easily due to collateral’s presence. Besides, presence of collateral makes this loan available at easy rate of interest. And the repayment period will be long with smaller monthly installment. Sometimes the repayment period extends up to twenty-five years. Secured loans, for homeowners, are becoming a quick way to borrow money in any urgent need of money, as loan sanction process is very fast A bundle of benefits makes secured loans the most favourable loan option for homeowners in the UK. The loan amount borrowed in this loan can be used to meet any purpose of borrower. Borrowers are free to use this amount on expenses, such as, home improvement, debt consolidation, car purchasing, children’s higher educations, and etc. Though, for borrowers, the risk of losing property is attached in secured form of loans, but choosing the suitable lender who makes him loan available at flexible terms, can deter the risk of losing property. Being fair in repayment and meeting lender ‘s terms can keep borrower at ease, and enjoy making all their financial need fulfilling through availing secured loan in UK.

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40-Year Mortgage!!!

Mon, 09 Oct 2006 01:07:47 -0800

Just as the California housing marketing is tanking, smart guys are inventing the 40-year fixed-rate mortgage. Yes, you can always extend the length of the mortgage to make an expensive house affordable to a few more folks.

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How To Get A Mortgage With Bad Credit

Mon, 09 Oct 2006 01:07:44 -0800

If you are a homebuyer with a poor credit rating you may be concerned how your credit score will impact your loan. Homebuyers with poor credit qualify for higher interest rates and pay higher fees; however, if you spend some time cleaning up your credit and research mortgage lenders you can still qualify for a competitive mortgage loan. Here are several tips to help you clean up your finances and find the best deal for your mortgage. There are many options for homebuyers with poor credit that simply did not exist ten years ago. The Internet is an excellent tool for locating and comparing mortgage offers. Online mortgage lenders, particularly those that specialize in bad credit lending, are often more flexible in their lending than traditional mortgage lenders. Bad credit mortgage lenders are also called “sub-prime” mortgage lenders; these specialty lenders cater to homebuyers with poor credit for a premium finance charge. Find a Government Program If you qualify for assistance from a government homebuyer program you will save yourself a lot of money. The FHA and VA have homebuyer programs that can help you qualify for a mortgage despite your credit. The Federal Housing Administration (FHA) guarantees mortgages for low income individuals and the Veteran’s Administration (VA) guarantees mortgages for veterans. If you qualify for one of these programs your interest rate will be significantly lower than if you take out a bad credit mortgage. Accept Higher Interest Rates and Fees If qualifying for a government program is not an option for you, qualifying for a mortgage from a bad credit lender may be your only option. Depending on the severity of your credit problems, a mortgage broker could be the best way to find a lender willing to work with you. It is important that you compare offers from a variety of mortgage lenders to find the best loan for your financial situation. You can learn more about your bad credit mortgage options by registering for a free mortgage guidebook.

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30-Year Interest Only Fixed Rate Mortgage

Mon, 09 Oct 2006 01:07:43 -0800

Woo ... what an innovation. It is not without merits. After all, who will on earth stay in the same house for 30 years and keep paying the mortgage? Sooner or later, the homeowner will either move or refinance, so if a mortgage company can make this 30-year interest-free balloon offering attractive enough, enough people will try it.

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35-Year Mortgage In California

Mon, 09 Oct 2006 01:07:40 -0800

Yes, well said, "lenders and government agencies will do whatever it takes to spur the housing market." And now the marketing is crashing.

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What Is Bi-Weekly Mortgage Payment?

Mon, 09 Oct 2006 00:13:10 -0800

Truth be told, if you have a bit patience, you can do it yourself without paying anything for the "priviledge" to get your mortgage off your back years earlier. All you need to do is to send in the payments regularly.

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How Bi-Weekly Mortgage Payment Actuall Works

Mon, 09 Oct 2006 00:13:07 -0800

If you want to do it on your own, you need to know that you shouldn't send your mortgage company a check of half of monthly payment once every two weeks. Instead, you should pay a bit more in your monthly check.

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Mortgage ABC: What Is Private Mortgage Insurance (PMI)

Thu, 05 Oct 2006 06:39:40 -0800

Private mortgage insurance (PMI) protects the lender against a loss if a borrower defaults on the loan. It is usually required for loans in which the down payment is less than 20 percent of the sales price or, in a refinancing, when the amount financed is greater than 80 percent of the appraised value.

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How To Get The Best Mortgage Deal

Thu, 05 Oct 2006 06:23:25 -0800

FDIC's advice is to shop around and put the offers to writing.

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Mortgage ABC: What Is Conventional Loans?

Thu, 05 Oct 2006 06:23:20 -0800

Conventional loans are mortgage loans other than those insured or guaranteed by a government agency such as the FHA (Federal Housing Administration), the VA (Veterans Administration), or the Rural Development Services (formerly know as Farmers Home Administration, or FmHA).

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Things To Look When You Shop For Home Equity Line Of Credit (HELOC)

Thu, 05 Oct 2006 06:17:52 -0800

If you decide to apply for a home equity line of credit, look for the plan that best meets your particular needs. Read the credit agreement carefully, and examine the terms and conditions of various plans, including the annual percentage rate (APR) and the costs of establishing the plan. The APR for a home equity line is based on the interest rate alone and will not reflect the closing costs and other fees and charges, so you'll need to compare these costs, as well as the APRs, among lenders.

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What Is A Home Equity Line Of Credit (HELOC)?

Thu, 05 Oct 2006 06:17:48 -0800

A home equity line of credit is a form of revolving credit in which your home serves as collateral. Because the home is likely to be a consumer's largest asset, many homeowners use their credit lines only for major items such as education, home improvements, or medical bills and not for day-to-day expenses. With a home equity line, you will be approved for a specific amount of credit--your credit limit, the maximum amount you may borrow at any one time under the plan. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75 percent) of the home's appraised value and subtracting from that the balance owed on the existing mortgage.

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Home Equity Line Of Credit (HELOC) vs. Traditional Second Mortgage Loan

Thu, 05 Oct 2006 05:59:15 -0800

If you are thinking about a home equity line of credit, you might also want to consider a traditional second mortgage loan. A second mortgage provides you with a fixed amount of money repayable over a fixed period. In most cases the payment schedule calls for equal payments that will pay off the entire loan within the loan period. You might consider a second mortgage instead of a home equity line if, for example, you need a set amount for a specific purpose, such as an addition to your home. In deciding which type of loan best suits your needs, consider the costs under the two alternatives. Look at both the APR and other charges. Do not, however, simply compare the APRs, because the APRs on the two types of loans are figured differently: - The APR for a traditional second mortgage loan takes into account the interest rate charged plus points and other finance charges. - The APR for a home equity line of credit is based on the periodic interest rate alone. It does not include points or other charges.

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How To Get A Home Loan After Bankruptcy?

Tue, 03 Oct 2006 15:10:51 -0800

There are specific and specialized bankruptcy lenders that will work with you and provide you with bankruptcy home loans. However, there are some requirements. For example, in general, you must have at least a credit score of 500 or more, in order for a bankruptcy home loan company to consider you. These lenders will generally bend over backwards to help you in securing a home loan. Here are some situations that generally apply for those wanting a home loan after bankruptcy: 1. You would likely only qualify for a maximum of eighty-percent financing. What this means for you, is that your down payment will be the twenty-percent that the loan does not cover. 2. It is also a requirement, for those wishing to obtain a bankruptcy home loan, to have a debt-to-income ratio of between forty-five to fifty percentile range. 3. You will likely have a higher interest rate than other people will. This should never stop you from obtaining the home of your dreams. However, as you begin to build your credit back up and improve your rating, you will have the option of refinancing at a later day for a lower rate of interest. It is the goal of most people, to someday become a homeowner. Even if you have filed for bankruptcy, you are not prevented from achieving that goal in any way. Every one makes mistakes; the key is to learn from them.

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A Correction Of Mortgage Rate and Home Price

Mon, 02 Oct 2006 15:54:13 -0800

This is certainly a bad time to be related to real estate in any way. Both mortgage rates and home prices are failing. How long will it last?

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Don't Be Fooled By Multiple Listing Service (MLS)

Sat, 30 Sep 2006 20:55:13 -0800

Do you know some real estate agents are intentionally gaming the MLS by relisting houses after they stay in the market for too long?

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Top Home Buying Tips

Thu, 28 Sep 2006 18:32:07 -0800

Some sound tips from CNN Money on how you should conduct a successful home purchase. These tips are especially useful as we are approaching a time of uncertainty in the real estate market.

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This Time, Falling Rates May Not Help

Thu, 28 Sep 2006 00:06:12 -0800

Don't read too much into the falling rates in the last few weeks. They may not rekindle the cooling market.

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Home Prices Start To Drop

Thu, 28 Sep 2006 00:06:12 -0800

This will be remembered as a reflection point in this round of housing boom.

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Choosing The Right Mortgage

Wed, 27 Sep 2006 17:48:17 -0800

Here is TD Canada Trust's tips on finding the right mortgage product for your household.

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What Is Cashback Mortgage?

Wed, 27 Sep 2006 17:48:17 -0800

This is a mortgage in which the Lender refunds a sum of money, either as a percentage of the loan or a flat figure, to the borrower upon completion. With this type of offer the borrower will typically be tied to the Lender's SVR by early repayment charges necessitating repayment of the cashback if the loan is repaid within a set period.

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What Is Balloon Payment Mortgage?

Wed, 27 Sep 2006 17:48:17 -0800

A “Balloon mortgage” is a non-amortizing loan. Unlike many other mortgage loans, a balloon mortgage loan does not pay itself off at the end of the loan term. At the end of the loan’s term, a portion of the principal remains and comes due in a single payment. In this type of mortgage loan, you will be assessed a series of equal monthly payments. After these payments have been made, the borrower will have to make a large final payment, which is called the balloon. Typically, monthly payments are set based on a 30-year amortization schedule, terms balloon based loans can range from 1 to 25 years. Balloon mortgages are also usually fixed-rate mortgages, but the monthly payments you make will most likely only include interest. The balance will be due after a short period of time, such as three to five years. If you take out a $100,000, five year balloon mortgage at an annual percentage rate of 15%, your monthly payments will most likely be $1250. To get this figure, multiply $100,000 by 0.15. This represents the interest charge for one year. To get the monthly payment, divide this figure further by 12. In this example, however, your monthly payments will cover only the interest charges. You will have to make other arrangements to pay off the principal when the time comes. At the proposed maturity date, the principal of the mortgage loan becomes due. Under the terms of the deal, you will have to make that final payment. If you are unable to do this, you may solve this situation by taking a second mortgage, refinancing, or simply selling your house at its current market value.

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Should You Choose Interest-Only Mortgage?

Wed, 27 Sep 2006 17:48:17 -0800

Repayment mortgages With a repayment mortgage your monthly repayments cover both capital and interest on the loan. No other repayment vehicle is needed, but your lender may insist on life insurance in case you die before the mortgage is cleared. On the plus side, a repayment mortgage is simple, straightforward and easy to understand. It also avoids the risk of investing in the stock market for your repayment vehicle. However, unlike a pension, ISA or endowment mortgage, repayment loans do not give you the opportunity to benefit from a rising stock market. Also, when remortgaging, people often choose another 25 year repayment mortgage, to keep the initial monthly costs down. This means that the overall total period of your mortgage debts combined increases over time. Interest only mortgages With an interest only mortgage, your monthly payments to the lender cover only the interest on the loan (i.e., they don't repay any of the capital). The full amount of the loan has to be repaid to the lender at the end of the term. To ensure you can make this final payment, you invest additional funds in investments which are designed to generate enough (preferably more than enough) capital to repay the loan at the end of the term. On the plus side, you can choose from a variety of investment vehicles, some of which can have tax advantages. And should you move or remortgage, your investment vehicle can usually be reallocated to the new mortgage. However, unlike a repayment mortgage, the total amount of your debt does not reduce over time. And there is no guarantee that your chosen investment vehicle will grow sufficiently to repay your loan (although you can usually top up your contributions to investments as you go along if this looks likely to be the case).]]>

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What Is A Bridge Loan?

Wed, 27 Sep 2006 17:48:17 -0800

A bridge loan (or swing loan) is a type of short-term loan in the financial industry. Bridge loans are typically taken out for a period of 2 weeks to 3 years in order to finance projects. Bridge loans are often used for commercial real estate purchases, to quickly close on a property, retrieve real estate from foreclosure, and to take advantage of a short-term financing opportunity in order to secure long term financing. Speed is a bridge loan's number one asset. A bridge loan is similar to a hard money loan. The primary difference between the two is that a hard money loan can refer to a distressed property or situation. A bridge loan may be simply a similar or higher interest loan that provides interim financing for an individual or business until permanent or the next stage of financing can be issued. For example a land loan for an investor might only cover 50% of the property value. A bridge loan might lend additional funding during the permit phase. The construction loan will be issued usually after the permits are issued and approved. Then the end loan or traditional mortgage will be issued after the certificates of completion are issued by the local building department.

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What Is Hard Money Loan?

Wed, 27 Sep 2006 17:48:17 -0800

A hard money loan is a real estate collateralized loan based on the quick-sale value of the property against which the loan is made. Most lenders fund in the 1st-lien position, meaning that in the event of a default, they are the first creditor to receive remuneration. Occasionally, lenders will subordinate to another 1st lien position loan; these loans are known as mezzanine loans or second lien position loans. Hard money lenders structure loans based on a percentage of the quick-sale value of the subject property. This is called the Loan-to-Value or LTV ratio and typically hovers between 60-70% of the value of the property. For the purposes of determine an LTV, the word "value" is defined as 'today's purchase price'. This the amount that a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a 1-4 months' time. This 'value' differs from an MAI appraised value.

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What Is Jumbo Mortgage?

Wed, 27 Sep 2006 17:48:17 -0800

A jumbo mortgage is a mortgage with a loan amount above conventional loan limits. Jumbo mortgages apply when agency (FNMA and FHLMC) limits don't cover the full loan amount. Fannie Mae (FNMA) and Freddie Mac (FHLMC) are large agencies that purchase the bulk of residential mortgages in the U.S. They set a limit on the maximum dollar value of any mortgage they will purchase from an individual lender. As of 2006, the limit is $417,000, or $625,500 in Alaska, Hawaii and the U.S. Virgin Islands. This leaves a portion of the market to look elsewhere for placement. Other large investors, such as insurance companies and banks, step in to fill the need with maximum mortgage amounts going to the $1 million or $2 million range. The average interest rates are typically greater than normal for conforming mortgages, and vary depending on property types and mortgage amount.

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Mortgage Fraud Hit Virginia

Wed, 27 Sep 2006 17:45:13 -0800

WSJ reports that $1 billion loss in mortgage fraud was claimed. This Virginia episode is only a recent example of what is hitting the nation.

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What is Self Cert Mortgage?

Wed, 27 Sep 2006 17:45:13 -0800

Mortgage lenders usually use salaries declared on wage slips to work out a borrower's annual income and will usually lend up to a fixed multiple of the borrower's annual income. Self Certification Mortgages, informally known as "self cert" mortgages, are available to employed and self employed people who have a deposit to buy a house but lack the sufficient documentation to prove their income. This type of mortgage can be benefical to people who have multiple sources of income, whose salary is made up of commission or bonuses and for people whose accounts may not show a true reflection of their earnings. Self cert mortgages have two disadvantages: the interest rates charged are usually higher than for normal mortgages and the loan to value ratio is usually lower.

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Housing Starts Is Tumbling

Wed, 20 Sep 2006 01:47:29 -0800

One more evidence of the free-fall drop of the housing market. Maybe not a good time to take a new mortgage or refinance to cash out, eh?

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Option ARM Holders May Suffer

Tue, 19 Sep 2006 20:38:31 -0800

If you hold an option ARM now, you will most likely head for some big trouble. MarketWatch has some suggestions:

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Should I Rent Or Buy?

Tue, 19 Sep 2006 20:26:27 -0800

RELO presented a comprehensive article on what you need to consider when you face the buy-or-rent decision. The answer should come after you carefully evaluate your lifestyle needs and financial situation.

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How Low Will Home Prices Go?

Tue, 19 Sep 2006 20:07:59 -0800

Great post Terri! Playing safe may be the best advice at this reflection point of housing market.

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Watch For Home Appraisal Red Flags

Tue, 19 Sep 2006 20:07:59 -0800

Since there is a lot of uncertainty in the housing market now, it is even more important to pay attention to the appraisal process -- you don't want to be the last one to hold the bag.

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What Is A Home Equity Line Of Credit?

Fri, 15 Sep 2006 07:17:14 -0800

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Home Equity Lines Of Credit vs. Traditional Second Mortgage loans

Fri, 15 Sep 2006 07:17:14 -0800

HELOC and second mortgage are sometimes inter-changeable. Make sure you take advantage of the better route.

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Home Equity Loan Or Home Equity Line Of Credit (HELOC)?

Fri, 15 Sep 2006 05:46:31 -0800

Ask yourself these five questions before you decide whehter to pick up a home equity loan or line of credit.

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Foreclosure Rates On The Rise

Fri, 15 Sep 2006 05:42:39 -0800

The housing market for 2008 will be, at the very least, rocky.

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Bankrate.com Under Scrutiny

Wed, 13 Sep 2006 12:23:50 -0800

I spotted my super-low ARM deal several years ago from Bankrate.com, and I love the simplicity and usefulness of this website. It is sad to see the site gets sued by an angry advertiser.

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Why You Should Get Pre-Approved For A Home Loan

Wed, 13 Sep 2006 12:23:50 -0800

By getting preapproved for a loan, the lender will give you an estimate of how much you can borrow and what interest rate you might qualify for. The process also gives buyers more leverage with sellers who are likely to prefer buyers who have already been assured of getting a loan. Buyers can also speed up their loan closings more quickly, typically by a week or two, says Deborah McNaughton, president of Professional Credit Counselors of Brea, Calif. Getting preapproved is different from getting prequalified for a loan. With a prequalification, a lender will give you an estimate of how much you can afford to borrow based on information you provide. A preapproval is a firmer commitment on the part of the lender, which verifies key information provided, to make a loan.

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Renting Is Not Throwing Money Away!

Wed, 13 Sep 2006 01:44:25 -0800

Yes, this post is right on point. Homeownership actually means "throwing" more money away.

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Is It Better to Buy or Rent?

Wed, 13 Sep 2006 01:41:45 -0800

I applaud NY Time's quantitative approach dealing with this critical personal finance question. Let me put it in a simple way, if you are buying a house just for investment regardless of your affordability and lifestyle needs, in today's market's interest rate, you are likely making a wrong decision.

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Why Owning Is Better Than Renting?

Wed, 13 Sep 2006 01:38:10 -0800

I pocketed $100,000 from owning a mid-class house for two years, but I'm currently renting now. While I agree with most of the assessment in this Fool's feature (which was published 6 months ago), today's changing interest rate landscape should tilt the decision toward renting for sure.

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FICO Expansion Score And How It Will Affect You

Sun, 10 Sep 2006 12:07:09 -0800

By looking at alternative information like banking records and utility payments, Fair Isaac is creating a new scoring system to assess the risks of potential borrowers without a lengthy credit history. This comprehensive Bankrate article also discussed similar scoring systems like Payment Reporting Builds Credit (PRBC), First American CREDCO's Anthem score, and eFunds Debit Report.

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Should You Refinance Your ARM or Not?

Fri, 08 Sep 2006 07:18:33 -0800

WSJ's Real Estate Journal explores whether one should refinance an outstanding ARM loan to a fixed rate mortgage. What do you think?

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5 Ways for Smart HELOC Usage

Fri, 08 Sep 2006 07:13:17 -0800

Home equity line of credit is a great tool.

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Should You Try Option ARM?

Fri, 08 Sep 2006 07:09:26 -0800

Option ARM is inherently dangerous, but if you are the right candidate, this can be a great financial tool for you.

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30-Year Mortgage Rate Rebounds

Fri, 08 Sep 2006 04:58:06 -0800

USA Today reports that the rate on 30-year fixed rate mortgage is creeping up after declining for six straight weeks.

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Common Mortgage Shopping Mistakes

Thu, 07 Sep 2006 03:55:10 -0800

Unlike elsewhere in your personal finance, mortage shopping mistakes are often costly, and sometimes deadly.

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5 Ways You Can Pay Off Your Mortgage Faster

Tue, 05 Sep 2006 02:49:41 -0800

What can be better than paying off your mortgage earlier? It will not magically happen, but as long as you have a good plan and perseverance, it is not too difficult either.

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Should You Pay Off Your Mortgage Early?

Tue, 05 Sep 2006 02:48:00 -0800

USAToday advises that in certain scenarios, postponing mortgage payoff may makes more financial sense. Take a look!

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How to Get Rid of Private Mortgage Insurance?

Tue, 05 Sep 2006 02:37:06 -0800

If you are a responsible borrower, you should stay alert to drop your private mortgage insurance (PMI) whenever you have a chance. If your house appreciates and your equity reaches 20% of the house value, you can request your lender to drop the coverage and save yourself hundreds of dollars a month.

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Increase Your Home's Value By (Cheap) Landscaping

Tue, 05 Sep 2006 02:17:55 -0800

Did you realize some quick landscaping can both allow you to speed up the sale of your house and fetch a better price? Before listing my house for sale, I hired a landscaping company for $200 for quick facelift of my house -- it has paid off well. (And it goes without saying that with a higher price, you will have more left for your savings account after mortgage payoff.)

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Six Easy Ways to Cut Mortgage Costs

Mon, 04 Sep 2006 09:12:35 -0800

Here are what SmartMoney recommends to be mortgage-smart. Take a try! • Polish Your Image • Get the Right Loan • Make a Down Payment of at Least 20% • Consider Paying Points • Pay Closing Costs Upfront • Pay Close Attention to Fees

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The Advantages of Portfolio Lenders

Sat, 26 Aug 2006 23:32:39 -0800

Portfolio lenders are usually savings and loan institutions, and sometimes banks. They are called "portfolio" lenders because they tend to originate loans for their own portfolio (usually adjustable rate loans), not for resale in the secondary market. The distinction gets blurred because most portfolio lenders also engage in mortgage banking. They will often pay more compensation to their loan officers for originating a portfolio product than for originating a fixed rate loan. You may also find that they are not as competitive as mortgage bankers and brokers in the fixed rate loan market, though this happens less frequently. It is often easier to qualify for a portfolio loan, so they are often a lender of "second resort" for those who cannot qualify for a fixed rate loan. If a loan officer is steering you towards "sub-prime" loans, it might be wise to check out a portfolio lender first. Portfolio lenders also can serve as "niche" lenders because certain things are more important to them than meeting the more standardized underwriting guidelines of a mortgage banker. An example would be a savings & loan which is more concerned with an individual's savings history than being able to fully document income. If you apply for a loan with a portfolio lender and you are declined, that's it. You're done. If you still think you should be able to qualify for a loan, you have to start from scratch somewhere else.

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Housing-Affordability Index Drops to Record Low

Sat, 26 Aug 2006 22:55:11 -0800

If only 40% of the homes sold in the market are considered affordable by a middle income family, are we reaching a reflection point?

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10 Cities Are Bracing For Mortgage Rate Shock

Sat, 26 Aug 2006 22:50:51 -0800

Is your neighborhood listed here? Surprisingly none of the top 10 areas is in California.

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The Advantages of Mortgage Brokers

Sat, 26 Aug 2006 11:30:08 -0800

Basically, wholesale lenders use mortgage brokers as their loan officers. They offer a lower rate to the broker, the broker adds on his compensation, and the rate is usually about the same as you would get using a mortgage banker. Sometimes the rate is lower, sometimes higher, depending on how much compensation the broker adds on. Mortgage brokers also learn the "hot points" of various wholesale lenders and can handpick the lender for a borrower which may be unique in some way. He will be able to submit your loan to either a portfolio lender or a mortgage banker. Another advantage is that, if a loan gets declined for some reason, they can simply repackage the loan and submit it to another wholesale lender. One extra advantage is that mortgage brokers tend to attract a high number of the most qualified loan officers. This is not universal, because mortgage brokers also serve as the training ground for those just entering the business. If you have a new loan officer and there is something unique about you or the property you are buying, there could be a problem on the horizon that an experienced loan officer would have anticipated. A disadvantage is that mortgage brokers sometimes attract the greediest loan officers, too. They may charge you more on your loan which would then nullify the ability of the mortgage broker being able to "shop" for the lowest rate.

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The Advantages of Mortgage Bankers

Fri, 25 Aug 2006 21:27:32 -0800

You can count on mortgage bankers having several strengths. As a starter, for the biggest ones, like Countrywide or Wells Fargo, you will recognize the "brand name." Usually, larger mortgage bankers are much better at promoting special first time buyer programs, cooperating with states and local governments. These programs will have slightly lower interest rates and costs than the current market rate. To qualify for these programs, your income must usually fall below a median average for the area and you must not have owned your residence for the last three years. Mortgage bankers may have problems just because they are "too big" or they may operate like well oiled machines. A lot depends on the branch or office you deal with. If you're applying for an FHA or VA loan, sometimes mortgage bankers are more adept at some of the intricacies involved than a mortgage broker. For example, the tract you are buying in may not be "approved" by FHA or VA. Mortgage bankers often have more clout in getting it approved than would a small mortgage broker. If your home loan is declined for some reason, many mortgage bankers allow their loan officers to broker the loan to another institution. However, because your loan officer is so used to promoting his own company's product, he often loses track of the "niches" offered by certain wholesale lenders.

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Mortgage Rates Fall For 5 Weeks In a Row

Fri, 25 Aug 2006 05:59:50 -0800

Bankrate reports the gap between 30-year fixed mortgage and 5/1 adjustable rate mortgage has been significantly reduced. With only a quarter point difference, should you consider to refinance your soon-to-be-adjusted ARM loans?

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The Difference Between Mortgage Bankers and Mortgage Brokers

Thu, 24 Aug 2006 23:20:52 -0800

When you apply for a loan, you might want to make sure who you are dealing with. Mortgage bankers and mortgage brokers are different groups of people in the big game of lending.

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Mortgage ABC: Debt-to-Income Ratios

Thu, 24 Aug 2006 23:16:09 -0800

Do you know what is debt-to-income (DTI) ratio? To determine the maximum mortgage amount, lenders use guidelines called debt-to-income ratios. DTI is simply the percentage of your monthly gross income (before taxes) that is used to pay your monthly debts. Because there are two calculations, there is a "front" ratio and a "back" ratio and they are generally written in the following format: 33/38. The front debt-to-income ratio is the percentage of your monthly gross income (before taxes) that is used to pay your housing costs, including principal, interest, taxes, insurance, mortgage insurance (when applicable) and homeowners association fees (when applicable). The back debt-to-income ratio uses the same calculation, only it also includes your monthly consumer debt. Consumer debt can be credit card debt, car payments, installment loans, and similar related expenses. Auto or life insurance is not considered a debt. A common guideline for debt-to-income ratios is 33/38. A borrower's housing costs should consume less than thirty-three percent of their monthly income. Add their monthly consumer debt to the housing costs, and it should take no more than thirty-eight percent of their monthly income to meet those obligations.

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