consumer education: You've Been Pre-Approved -- Now Get RE-Approved - 12/19/07 10:21 AM
Even if you've been recently pre-qualified (or pre-approved) for a mortgage, it may be prudent to get "re-approved". The mortgage industry is changing quickly; being prepared beats the alternative.
Recently, mortgage lenders have made adjustments in what they will lend, and to whom. This shrinks the pool of eligible mortgage borrowers.
… (3 comments)
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consumer education: How to Squeeze Extra Tax Deductions from Your Mortgage In 2007 - 12/18/07 04:55 PM
For most Americans (but not all), mortgage interest is tax-deductible in the year in which it was paid.
With some advance planning, therefore, a homeowner can increase his 2007 tax deductions by paying additional mortgage interest while the calendar still reads 2007.
The key is to make the mortgage … (1 comments)
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consumer education: Mortgage Rates are Going Up -- But Not for the Reason You'd Expect - 12/13/07 12:16 PM
Conforming mortgages are getting more expensive -- but not because of mortgage rates.
To protect against further weakness in the housing sector, Fannie Mae and Freddie Mac are instituting "delivery fees" on all conforming mortgages, effective March 2008.
Fannie Mae's Adverse Market Delivery Charge and Freddie Mac's Market Condition Delivery Fee will … (7 comments)
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consumer education: Why Credit Card Holders May Benefit from The Fed's Actions Today - 12/11/07 12:28 PM
The Federal Open Market Committee meets today and will release a public statement at 2:15 P.M. ET.
It is widely expected that the FOMC will lower the Fed Funds Rate by at least 0.250%.
When the FOMC lowers the Fed Funds Rate, it is trying to "loosen" credit for … (2 comments)
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consumer education: The Week in Review (December 10, 2007): What to Watch For - 12/10/07 02:13 PM
Among lingering doubts about housing and credit markets, and a general uncertainty about the U.S. economy, the mortgage bond market tanked towards the latter part of last week.
As investors moved away from mortgage bonds, mortgage rates forcefully bounced off their two-year lows.
A major factor behind last week's … (1 comments)
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consumer education: Appraisals are As Much Art as Science - 10/25/07 06:26 AM
The number of home valuation websites continues to grow. A simple Google search for "How much is my home worth?" shows 118,000 results and seems to get larger month after month.
For home sellers, these programs can give a false sense of security (or insecurity!) about at what price a home should … (7 comments)
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consumer education: How the Stock Market is Directing Traffic for Mortgage Rates - 10/24/07 02:22 AM
As we talked about Monday, the stock market appears to be directing traffic for the bond market.
Monday was a flat day for stocks, and it was a flat day for bonds, too. Mortgage rates idled.
Tuesday, with no economic data hitting the wires, market participants looked for direction … (1 comments)
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consumer education: The Week in Review (October 22, 2007) : What to Watch For - 10/23/07 06:23 AM
Rising oil prices, weak housing data, and ongoing credit concerns pushed mortgage rates lower last week as investors sought safety for their dollars. Stock markets took losses and bond markets -- including mortgage bonds -- booked gains. Remember, when mortgage bonds go up in price, mortgage rates come down. To understand … (2 comments)
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consumer education: Just Because You Can Borrow From a 401(k) Plan Doesn't Mean You Should - 10/19/07 09:15 AM
According to the Wall Street Journal, the number of Americans taking loans against their 401(k) plans is increasing because most plans allow participants to borrow funds to purchase a home or to avoid foreclosure.
But just because the avenue is there, though, doesn't mean that borrowing from a 401(k) is a good … (9 comments)
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consumer education: How Terrible Housing Data Can Actually Help Push Home Values Higher - 10/18/07 06:45 PM
Once again, the headlines may be misleading you. It's a good thing that Housing Starts dropped last month -- despite what the papers say.
A "housing start" is a new residence on which construction has started. Yesterday, the government released September 2007's Housing Starts data for the country.
There … (3 comments)
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consumer education: How Japan and China Can Impact the Mortgage Rate on Your Home - 10/17/07 09:33 AM
Mortgage rates are determined by the prices of mortgage bonds; this, we've covered before. As bonds prices go up, bond rates come down.
And the price of a mortgage bond is a matter of Supply and Demand.
The greater the demand for a bond, the higher its price. High … (3 comments)
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consumer education: The Week in Review (October 15, 2007) : What to Watch For - 10/16/07 10:35 PM
The economy appears to have shrugged off August's credit market turmoil and is continuing to expand. This pushed mortgage rates higher last week as market players move money into stocks and hope to capitalize on the Dow Jones rally.
After the Fed's last meeting, the central bank lowered the Fed … (2 comments)
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consumer education: How Mortgage Calculators Can Be Misleading - 10/16/07 09:38 PM
Mortgage calculators are ubiquitous on real estate-related Web sites but that doesn't mean that they're helpful.
See, Internet-based mortgage calculators take three figres into consideration when determining "how much home can you afford".
Income Debt Downpayment/Equity Next, the calculator figures in your downpayment, multiplies your income by a factor of … (3 comments)
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consumer education: Jumbo Mortgage Rates Shed Some of Their Risk, Rates Fall - 10/10/07 11:41 AM
As a sign that some normalcy is returning to mortgage markets, the premium attached to jumbo mortgage rates is getting smaller.
A "jumbo"-sized loan is one that exceeds $417,000 on a single-family residence, among other criteria.
Conforming 30-year fixed rate mortgages and jumbo 30-year fixed rate mortgages tend to … (11 comments)
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consumer education: The Week In Review (October 9, 2007) : What to Watch For - 10/09/07 03:58 PM
As expected, the big news last week was the Non-Farms Payroll report. What wasn't expected, though, was the strength of the report. Mortgage rates ended the week on a large up-tick.
110,000 jobs were created in September, according to the Bureau of Labor Statistics. This exceeded Wall Street expectations by … (1 comments)
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consumer education: Need $$ for Downpayment? Think About . . . (4 of 4) - 10/06/07 02:17 AM
Option 4: Lease-To-Own With a lease-to-own, you essentially lease a home, but make larger payments in order to begin accumulating a downpayment. For example, if a house would normally lease for $800, you might lease it for $1,000/month, with $200/month going into a special account. At the end of a … (7 comments)
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consumer education: Need $$ for Downpayment? Think About . . . (3 of 4) - 10/06/07 02:15 AM
Option 3: Owner Financing Owner financing means exactly that: the owner (or seller) finances a portion of your home purchase. For example, you might borrow 80% of the value of a home from a lending institution, and "borrow" the other 20% from the owner. In this situation, the owner "carries … (1 comments)
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consumer education: Need $$ for Downpayment? Think About . . . (2 of 4) - 10/06/07 02:13 AM
Option 2: Special Loan Programs Special loan programs come and go quickly. There is many available right now that will allow the seller to provide up to 6% towards the down payment and/or closing costs required for a home loan. That means no money out of your pocket if you … (2 comments)
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consumer education: Need $$ for Downpayment? Think About . . . (1 of 4) - 10/06/07 02:10 AM
Option 1: FHA Loans Although there isn’t a "No Money Down" option yet, the FHA loan is by far one of the best alternatives for people who want to buy a home and don’t have much money to put down. With an FHA loan, you could put down as little … (0 comments)
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consumer education: Simple Ideas for Raising Money for a Down Payment… - 10/06/07 02:02 AM
With all the credit tightening going on, many programs will require that buyers come up with at least some small downpayment. Even if you are able to secure 100% financing, you will still need to pay closing costs (if the seller does not agree to pay for you). So, here are … (9 comments)
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consumer education: How Today's Employment Data is Hurting Mortgage Rates - 10/05/07 09:32 AM
On the first Friday of each month, the Bureau of Labor Statistics releases its employment report for the United States.
Last month, the jobs report showed that the economy actually lost jobs for the first time since 2003. The total loss of jobs equaled 4,000 and contributed to the … (6 comments)
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consumer education: FHA Bans Seller-Financed Downpayment Assistance Programs - 10/03/07 03:45 PM
Effective November 7, 2007, the Federal Housing Administration is expected to ban home buyers' use of most seller-financed Downpayment Assistance programs. The Nehemiah program has been granted an exception through March 31, 2008.
DPAs are (were?) very popular in FHA mortgage circles as a way to help buyers finance … (6 comments)
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consumer education: How Much Does a 2,200 Square Foot Home Cost? - 10/02/07 08:28 AM
So, what does it cost to buy a 2,200 square foot home with 4 bedrooms, 2.5 bathrooms and a 2-car garage?
It depends on where you live.
In a study of 317 U.S. markets, Coldwell Banker concluded that the average price for such a home is $422,343.
Beverly Hills, … (2 comments)
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consumer education: What Happens on the National Real Estate Scene Shouldn't Matter to You - 09/26/07 05:05 PM
The National Association of Realtors® released its monthly Existing Home Sales report for August 2006 and, as usual, you should be ignoring it.
The report discusses real estate on a national level and we all know that real estate is a local phenomenon.
It's not that the report isn't helpful … (10 comments)
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consumer education: Can't Find Your Cash? You Probably Ate or Drank It! - 09/25/07 02:17 PM
In a study of 2,036 U.S. adults commissioned by Visa USA, nearly half of all Americans are losing track of their money.
An average of $45 in cash is "lost" each week in what Visa dubs "mystery spending", Visa's version of "I know I had this money in my … (11 comments)
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consumer education: The Week In Review (September 24, 2007) : What To Watch For - 09/24/07 04:18 PM
In a semi-surprise move last week, the Federal Reserve lowered the Fed Funds Rate by 0.500%.
The Fed wants to prevent a dramatic economic slowdown that started in the housing sector and appears to be spilling over into other sectors now, too.
According to some pundits, the half-point FFR drop was … (2 comments)
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consumer education: Come Home to Howard County, MD - 09/22/07 09:58 PM
What: The Howard County Department of Housing & Community Development is sponsoring the 2nd "Come Home to Howard County" Housing Fair. There will be educational workshops, hands-on seminars for home buyers, and giveaways throughout the day.When: Saturday, September 29, 2007 from 10:00 AM - 2:00 PMWhere: Wilde Lake High School, 5460 Trumpeter … (0 comments)
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consumer education: Want More Proof that the Fed Doesn't Control Mortgage Rates? - 09/21/07 09:08 AM
For more proof that the Fed does not control mortgage rates, consider this:
In the immediate aftermath of the Fed's decision to lower the Fed Funds Rate by 0.50%, mortgage rates improved by about 0.25% on average.
But, in the two days since, mortgage rates have not only given back those … (8 comments)
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consumer education: How Prime Rate Relates to the Fed Funds Rate - 09/20/07 09:07 AM
Prime Rate is currently 7.750%.
Prime Rate is the "shorthand" name for the Wall Street Journal Prime Rate, a variable interest rate that is used in pricing many types of consumer loans.
These loans include:
Home equity lines of creditCredit card loansAuto loans Prime Rate's variable nature is tied to the … (7 comments)
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consumer education: Making English out of Fed-Speak (September) - 09/19/07 09:11 AM
The Fed lowered the Fed Funds Rate by 0.50% yesterday. A rate decrease was expected by most market participants, but the 50 basis points movement seemed to catch some players off-guard.
Mortgage rates dipped in the wake of the announcement, but the real winners are homeowners with balances on their home … (0 comments)
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consumer education: How the Fed Will Disappoint No Matter WHAT it Does Today - 09/18/07 08:54 AM
It's all eyes on the Fed today; the market anxiously awaits the central bank's 2:15 P.M. ET press release.
Some of the market bias towards a 0.50% rate cut has decreased in favor of a 0.25% cut. This shift is largely psychological.
Markets are trying to "get inside … (3 comments)
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consumer education: The Week in Review (September 17, 2007) : What to Watch For - 09/17/07 09:17 AM
The volatile path of mortgage rates last week followed the changing expectations for Tuesday's Federal Open Market Committee meeting.
The FOMC sets the Fed Funds Rate, a benchmark interest rate upon which Prime Rate is based.
According to Federal Funds Rate futures, there is a 94 percent chance that the … (4 comments)
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consumer education: What Would it Take for YOU to Feel the Pinch of Higher Gas Prices? - 09/14/07 08:48 AM
As crude oil crossed $80 a barrel Thursday, the Wall Street Journal ran an interactive poll with its readers.
What sustained price for gasoline would cause you to cut back on other household spending?
The graph above shows the on-going results of the non-scientific study. You can chime in, too, at http://forums.wsj.com/viewtopic.php?t=805.
… (10 comments)
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consumer education: What the Price of Gold Says about the Economy - 09/13/07 09:33 AM
Headlines today read that the value of gold is nearing its all-time high (adjusted for inflation). The lay people would ignore this story, but those in the know understand that the price of gold is usually reflective of the state of the global economy.
The spot price of gold tells a lot … (0 comments)
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consumer education: Why Mortgage Rates Fell BEFORE the September 18 Fed Meeting - 09/12/07 06:02 PM
Mortgage rates "come from" one place only: the prices of mortgage bonds as determined by investors.
The higher the price, the lower the corresponding return, or rate.
Bonds -- like stocks -- are traded as securities. An investor may buy Microsoft stock if he thought the company's future looked bright, … (8 comments)
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consumer education: Explaining Why Per Diem Is Not A Closing Cost - 09/11/07 10:18 PM
Line 901 of a mortgage settlement statement is commonly confused for a closing cost. It's actually an "advance payment" on the mortgage.
Often called a per diem by mortgage professionals, line 901 itemizes a borrower's prepaid mortgage interest charges due at closing. The total amount due equals the daily rate of … (28 comments)
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consumer education: The Week In Review (September 10, 2007) : What To Watch For - 09/10/07 09:30 AM
Weak employment data pushed mortgage rates lower last week. Against expectations of 110,000 new jobs created in August, last Friday's Non-Farm Payrolls report showed a loss of 4,000 jobs.
The story made headlines all over the country this weekend but its connection to mortgage rates is not always clear. Here's how … (2 comments)
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consumer education: How Today's Jobs Report Impacts Mortgage Rates - 09/07/07 10:15 AM
This morning, the government reported that the U.S. economy lost 4,000 jobs in August. Led by losses in manufacturing and construction, this is the first time since 2003 that the economy has failed to add jobs in any given month.
Markets had been expecting a job gain of roughly 110,000, but … (4 comments)
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consumer education: Traders Predict The Fed Funds Rate Future Using Options - 09/06/07 11:10 AM
The Federal Open Market Committee meets September 18, and traders are aren't quite sure what to expect with respect to the Fed Funds Rate.
Will the FFR stay unchanged? Will it FFR decrease? If it decreases, by how much? These are questions that are perplexing market participants.
Luckily, we … (2 comments)
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consumer education: An Appetite For Jumbo Loans Returns - 09/05/07 09:20 AM
Yesterday was a rather drab day in mortgage circles -- not much happened and mortgage rates idled. The bigger story was how liquidity appears to be slowly returning to some areas of the beaten-down mortgage market.
Specifically, liquidity is returning to prime, fixed-rate, full documentation jumbo loans and pricing appears to … (2 comments)
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consumer education: The Week In Review (September 4, 2007) : What To Watch For - 09/04/07 11:55 AM
Federal Reserve Chairman Ben Bernanke took to the pulpit Friday in Jackson Hole, but his remarks made little impact on mortgage bond trading.
The Fed is aware of economic issues related to housing and mortgage debt, Bernanke said.
He implied that the Fed wants more evidence that inflation has slowed … (5 comments)
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consumer education: Consumer Alert: Homeowners' Associations - 09/01/07 07:43 PM
When you're looking for a new home, here's something to keep in mind: many communities and almost all condos have Homeowner’s Associations. These are groups of people who live in the community and have been elected to make sure the rules of the Board are followed by all homeowners in the … (0 comments)
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consumer education: How The Stock Market Rally Changed Mortgage Pricing For The Worse - 08/30/07 09:12 AM
Mortgage rates unexpectedly increased yesterday afternoon as the U.S. stock market staged a late rally.
By the end of the day, the Dow Jones Industrial Average (DJIA) was up 1.9 percent, or 247.77 points.
This is a typical pattern.
When stocks are moving higher, investors want to ride the … (6 comments)
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consumer education: What's The Existing Home Sales Report Got To Do With You? Nothing. - 08/28/07 12:41 PM
When the National Association of Realtors® releases its monthly Existing Home Sales report, people tend to watch every word, fact and figure in the statement in hopes of decoding the real estate market.
It's all wasted energy.
It's impossible to use the NAR report in everyday living because the NAR report … (4 comments)
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consumer education: The Week In Review (August 27, 2007) : What To Watch For - 08/27/07 11:00 PM
This week is data-heavy so markets will finally get to focus on fundamentals instead of fear.
For the past two weeks, uncertainty about the economy has led to psychologically-driven mortgage interest rate movements.
Rising defaults devalue mortgage holdings and many investors are now expecting the defaults levels to rise … (0 comments)
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consumer education: Understanding Real Estate Terms: Absorption Rate - 08/24/07 10:20 AM
In light of today's New Homes Sales data and Monday's forthcoming Existing Homes Sales report, let's review a term that real estate professionals use to describe housing inventory.
Absorption Rate is a real estate term for the length of time required to sell all of a given stock in a given … (3 comments)
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consumer education: New Homes "Sold" Is Not The Same As New Homes "Closed" - 08/23/07 09:56 AM
With tomorrow morning's New Home Sales report, markets will get a look at the number of newly-constructed homes sold in July.
The figure is expected to be in the 825,000 range. This is lower than June's 834,000 figure.
But -- as always -- there is more to the story.
When the … (3 comments)
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consumer education: Why Private Mortgage Insurance (PMI) Is Suddenly Popular - 08/22/07 09:02 AM
Suddenly, Private Mortgage Insurance is back in vogue. If only by default.
The story background is well-documented in this Bankrate.com article from 2002. The article is five years old, but it still raises some salient points.
What the article doesn't highlight is that second mortgages such as home equity loans are … (10 comments)
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consumer education: Like The Fed Funds Rate, The Fed's Discount Rate Does Not Control Mortgage Rates - 08/21/07 02:03 PM
Friday, the Federal Reserve lowered its Discount Rate by 0.50% in an effort to preserve liquidity among our nation's banks.
This has nothing to do with mortgage rates that people like you and I get for our homes. Well, not directly at least.
The Discount Rate is the rate at which … (6 comments)
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consumer education: Make it a Goal to Buy a House - 08/20/07 10:33 AM
How do people get what they want?
Easy. First they have to know what they want, and visualize it. In your case, you want to buy a house. So we need for you to create the goal that you will buy a house. And to make it even better, you … (8 comments)
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consumer education: How Big Will Your Backyard Be? - 08/18/07 10:59 PM
One of the things new homeowners look forward to is having a yard to call their own. So I get a kick out of asking my clients this question: How big will your backyard be?Some people tell me they want huge backyards so their kids can play with their pets. … (7 comments)
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consumer education: 7 Things You Must Never Do When Applying For a Home Loan - 08/18/07 09:55 PM
This is a list of things to steer clear of when you are seeking to obtain financing for a home. The following items may prove to be a detriment when you wish to move forward with the loan process.
Don't buy or lease an auto! Lenders look carefully at your … (14 comments)
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consumer education: Why The Mortgage "Crisis" Is Not A "Crisis" For Everyone - 08/17/07 12:26 PM
Another day, another batch of Gloom-and-Doom stories in the news. Remember to keep a level head -- the media's job, in part, is to sell newspapers and capture eyeballs. Using the word "crisis" repeatedly is one way to meet that goal.
A few facts to keep it all in perspective:
There … (5 comments)
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consumer education: Is Your Loan Officer Incorrectly Reading In Which Direction Mortgage Bonds Are Moving? - 08/16/07 10:15 PM
As we discuss over and over again, mortgage interest rates are determined by the price of mortgage bonds. Nothing else, and nothing more. The challenge in that truth is that mortgage bond pricing is not very accessible to the general public.
This includes the press.
As a result, the media … (4 comments)
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consumer education: A Few Good Reasons To Ignore Your Mortgage Prepayment Penalty - 08/15/07 11:12 AM
Industry trade magazine Inside B&C Lending pegs the 2006 dollar volume of new sub-prime loans at $640 billion. According to the Real Estate Charts chart (exhibit 18), 78% of those dollars were in 2-year adjustable loans.
A loan of this variety is often called a 2/28 ("two twenty-eight").
A 2/28 originated … (7 comments)
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consumer education: Simple Steps To Keep Home Insurance Costs Down - 08/14/07 11:06 PM
As homeowners insurance premiums rise across the nation, Bankrate.com writes a helpful story on ways to keep your premiums down. The tips may surprise you.
Some of the highlights include:
Don't think a series of small claims is better than one big claim. The smaller claims are more expensive to process for … (5 comments)
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consumer education: The Fed Funds Rate Does Not Directly Impact Mortgage Rates - 08/14/07 10:28 AM
It's been on the news a few times lately, so let's address a key misconception about the Fed and its relationship to mortgage rates.
The markets now anticipate that the Fed will lower the Fed Funds Rate within the next 45 days. As a mortgage rate shopper, there's not much reason … (9 comments)
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consumer education: What's The True Risk In Mortgage Lending? It's Anyone's Guess Right Now. - 08/12/07 05:46 PM
Any security -- stock, bond, or otherwise -- has a specific risk associated with it. Based on that risk, an investor decides whether or not the price is worth paying. If the security is a "good value", an investor will buy it. If not, the investor will pass.
Until recently, mortgage … (2 comments)
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consumer education: Why Alerting Your Mortgage Lender About Bad News In Advance Is Better Than Surprising Them - 08/10/07 02:34 PM
Having trouble paying your mortgage? You aren't alone. According to RealtyTrac, 1 out of every 134 homes filed for foreclosure in the first half of 2007.
More and more, though, mortgage companies are doing their best to work things out with delinquent homeowners.
Loss of a job or a sudden medical emergency are … (5 comments)
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consumer education: Are You Eligible To Get Rid Of Your PMI Payments? - 08/10/07 02:18 PM
If you're currently paying Private Mortgage Insurance (PMI) and have been for several years, it may be time to petition your lender to have the PMI payment removed.
Waiting for it to drop off "automatically" may mean you will be stuck with the higher payments for at least five to ten years … (4 comments)
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consumer education: Why Downpayments Are Investments, Not Cushions - 08/10/07 02:00 PM
When home prices are stable or falling, home buyers often mischaracterized their downpayment on a home, calling it their "cushion" against falling home prices.
Nothing could be farther from the truth.
Nobody wants to owe money when they sell their home. In fact, when asked, most people will answer that they just want … (3 comments)
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consumer education: National City Mortgage Reiterates its Strong Position and Continuing Commitment to the Mortgage Industry - 08/10/07 09:59 AM
August 10, 2007 - Reflecting recent conditions in the mortgage markets, several media reports have questioned the strength of National City Mortgage and its future participation in the mortgage industry.
National City Mortgage derives strength from its status as a subsidiary of National City Corporation (NYSE: NCC), one of the … (2 comments)
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consumer education: Sharing Your Credit Card Balances Can Lower Your Mortgage Rates - 08/10/07 01:45 AM
Typically, higher credit scores get lower mortgage rates and access to a wider array of mortgage products.
Extent of Indebtedness comprises 30% of a credit score and is the second largest component in the credit scoring model. In plain-speak, Extent of Indebtedness is: "How close is this person to maxing … (4 comments)
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consumer education: How To Answer "How Much Home Can I Afford?" - 08/10/07 01:38 AM
Home shoppers know to consider the impact that a new home will have on their household budget and that is called keeping your eye on the ball.
Unfortunately, most shoppers are keeping their eye on the wrong ball.
The proper way to answer the "How Much Home Can I … (0 comments)
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