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borrowers

The Unexpected "Tax" That The Refi Boom Places On Borrowers

December 23, 2008

In late-November, the Federal Reserve pledged $600 billion to buy mortgage-backed securities. The announcement drove down mortgage rates and started the Refi Boom. Then, the Federal Reserve made a second series of statements after its scheduled meeting last Tuesday, causing mortgage rates to plunge again

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Fannie Mae Increases Its Mandatory Loan Fees For All Borrowers

August 7, 2008

Fannie Mae announced a new risk-based pricing model and additional mortgage delivery fees this week, adding to the cost of buying or refinancing a home.
Risk-based pricing was first introduced by Fannie Mae this past April. It added new, mandatory loan fees for high-risk borrowers while rewarding a small group of low-risk borrowers [...]

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Why It May Be Prudent To Lock Your Mortgage Rate Before 2:15 P.M. ET Today

August 5, 2008

The Federal Open Market Committee meets today and is widely expected to hold the Federal Funds Rate at 2.000 percent.
This does not mean that mortgage rates will stay flat, too, however.
The Fed Funds Rate is a different type of interest rate from the ones charged to American homeowners for their mortgages.
The Fed [...]

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Mandatory FHA Loan Fees Increase For Some, Fall For Others

July 18, 2008

For the first time in its history, the FHA changed its funding fees and mortgage insurance structure this week.  FHA-insured home loans are now subject to a risk-based pricing adjustment, as shown by the table above.
Because of risk-based pricing, FHA home loans are now more expensive for borrowers with less-than-ideal credit profiles, and less [...]

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Why July May Be The Best Time To Write A Purchase Contract In 2008

July 8, 2008

It’s a terrific time to buy a home, but not because homes happen to be affordable.
It’s a terrific time to buy because the variety of mortgage products available to home buyers looks poised to shrink.
Monday, Alt-A mortgage lender IndyMac Bank stopped accepting mortgage applications and it’s likely that other Alt-A lenders will [...]

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Are Sub-Prime Mortgage Problems Finally On Their Way Out?

July 2, 2008

In the summer of 2005, sub-prime mortgage lending was at its peak.  Rates were relatively low and lending guidelines were relatively loose.
At the time, the “standard” sub-prime mortgage product was the 3/27 ARM.
The 3/27 had a few basic traits:

A fixed, 3-year “starter rate”
Every six months thereafter, the mortgage rate changed
The formula by which it [...]

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Why It Will Be Easier To Get A Mortgage Approval Today Than Monday

May 29, 2008

Mortgage financier Fannie Mae is toughening its mortgage application decision-making process effective Monday, June 2, 2008.
The new guidelines will force many Americans to face higher mortgage rates, higher loan fees, or to be shut out from “prime” mortgage rates altogether.
The new “mortgage rules” include the following changes:

Higher income levels required for basic approvals
Interest [...]

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Before Co-Signing For A Mortgage, Consider The Deeper Implications

April 22, 2008

As mortgage lenders limit how much money they will lend and to whom, co-signing home loans is growing in popularity.
“Co-signing” a home loan is when a third-party — usually a parent or relative — promises to make repayments to the bank in the event that the borrower falls behind on his obligations.
Money experts [...]

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Mortgage Lenders Get “Once Bitten, Twice Shy” And Impose New Restrictions

April 11, 2008

Getting approved for a conforming home loan is now tougher than before.
Again.
As home loan defaults mount, government-sponsored financier Fannie Mae has imposed new guidelines on what it will lend and to whom, highlighting the need for a strong credit profile and a downpayment.
In other words, Fannie Mae is outright declining mortgage applicants whose [...]

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FHA Home Loans Emerge As A Cheap Alternative For Low-Credit Score Homeowners

April 1, 2008

FHA stands for Federal Housing Administration, a by-product of the National Housing Act of 1934 and now a sub-group within the U.S. Department of Housing and Urban Development (HUD).
The FHA is not a lender nor does it build homes.
The FHA exists to insure lenders against loss in the event that a homeowner defaults [...]

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Planning For A “Quick Close”? Now May Not Be A Good Time.

February 12, 2008

On the backs of surging purchase activity across the country and low mortgage rates, home loan applications have risen to a near four-year high.
For people with mortgage applications in process, some patience may be required.
In 2006 and 2007, mortgage volume slowed nationwide.  Narrowing mortgage guidelines restricted the number of eligible borrowers [...]

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The Difference Between Private Mortgage Insurance And Homeowners Insurance

December 28, 2007

Private mortgage insurance (PMI) is insurance for the mortgage lender in the event of homeowner default.
PMI helps the lender recover its costs and losses after foreclosing and selling a repossessed home.
PMI rates vary by loan type, loan size, and loan characteristics.  The higher the risk to the bank, the higher the cost [...]

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The Difference Between Private Mortgage Insurance And Homeowners Insurance

December 28, 2007

Private mortgage insurance (PMI) is insurance for the mortgage lender in the event of homeowner default.
PMI helps the lender recover its costs and losses after foreclosing and selling a repossessed home.
PMI rates vary by loan type, loan size, and loan characteristics.  The higher the risk to the bank, the higher the cost [...]

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You’ve Been Pre-Approved — Now Get RE-Approved

December 19, 2007

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.
Some of these guideline [...]

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Mortgage Rates Are Going Up — But Not For The Reason You’d Expect

December 13, 2007

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 add [...]

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Mortgage Rate Relief Plan: Who Qualifies For Help?

December 7, 2007

Thursday, the White House revealed its HOPE NOW program, aiming to help sub-prime borrowers freeze their initial “teaser” rates for a period of five years.
The program is receiving a lot of ink in the newspaper dailies but sometimes it’s unclear exactly what the program offers, and to whom.
Let’s look at the details and [...]

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What Does It Mean To “Escrow” Taxes And Insurance?

December 5, 2007

As a homeowner, your financial obligations extend beyond your monthly mortgage payment.  Periodically, you are also required to pay real estate taxes and homeowner’s insurance premiums.
Each month, you pay your mortgage payment to a company called a “mortgage servicer” (because they “service” your mortgage each month).
In addition to the risk of not [...]

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It’s A Good Time To Buy — But Not For The Reasons You May Think

November 27, 2007

Since November 1, the following banks have written-down at least $1 billion in their respective loan portfolios:

Bank of America
Barclays
Bear Stearns
Citigroup
HSBC
Morgan Stanley
Wachovia
Wells Fargo

This is a big deal to people in the market for a home loan because when banks repeatedly take mortgage-related losses, it can lead to major risk aversion — even for [...]

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It’s Not Your Imagination : Getting A Home Loan Is More Challenging For Everyone

November 7, 2007

If it feels like mortgage approvals are harder to come by than in years past, that’s because it is.
And we’re not just talking about sub-prime mortgages (for which the market has nearly vanished in just 12 months).
According to a story on Marketwatch, mortgage guidelines are more challenging for everyone to meet [...]

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How To Save Money By Choosing A Better

October 31, 2007

When a loan officer locks a mortgage rate for you, that rate is tied to an expiration date.
The expiration may be 30 days, or 75 days, or 90 days, or more into the future, but so long as the rate is “locked”, the bank is committed to delivering that rate to you [...]

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