banks

Looking Back And Looking Ahead : March 31, 2008

March 31, 2008

Mortgage rates were up last week on weak housing data and a growing nervousness about mortgage bond quality. Rates would have been up more if not for a tame inflation reading Friday. The Personal Consumption Expenditures report fell Friday to 2.0% year-over-year, putting it back within the Federal Reserve’s comfort zone of 1-2 percent. PCE […]

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How Picking Up The Telephone Can Reduce The National Foreclosure Rate

March 7, 2008

“Foreclosure” is the legal process by which a bank repossesses a home from a borrower and, according to RealtyTrac, 1 out of every 100 homes were in some stage of the foreclosure process in 2007. This figure is astounding because foreclosure is expensive to both homeowners and banks.  Both parties have an interest in avoiding […]

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The Right Question: “How Much Do I Want To Spend On Housing Each Month?”

March 6, 2008

One of the most popular questions that home buyers ask real estate and mortgage professionals is “How much home can I afford?” It’s a normal question to ask, but it’s not the most effective way to plan your finances. Banks will almost always approve you for a home loan in excess of your household budget. […]

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Recession or Inflation? Even Fed Members Don’t Know For Sure.

March 5, 2008

With Friday’s jobs report looming, mortgage markets are especially skittish about whether the economy is in a recession, or facing inflation. Four Fed speakers Tuesday did little to quell the debate: 9:00 A.M.: Fed Chairman Bernanke stayed on message that foreclosures and falling home values are dragging down the economy. 10:00 A.M.: Fed Vice Chairman […]

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History Is A Teacher: Cuts To The Fed Funds Rate Lead To Mortgage Rate Hikes

January 30, 2008

When the Federal Open Market Committee adjourns from its two-day meeting today, it is widely expected to lower the Fed Funds Rate. This does not mean that mortgage rates will fall. In fact, using history as an indicator, we should expect mortgage rates to rise if the Fed Funds Rate falls. Remember: The Fed Funds […]

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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 […]

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Who Are Fannie And Freddie And How Do They Help Homeowners?

November 21, 2007

Fannie Mae and Freddie Mae are quasi-government agencies in that they are publicly-owned, but overseen by the government. The purpose of Fannie and Freddie is to make sure that money is available to homeowners that want home loans. Neither lends to consumers directly, though; you’ll have to talk to your loan officer for that.  Instead, […]

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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 — gold-star […]

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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 at your […]

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What Is The Fed Funds Rate?

October 31, 2007

The Federal Open Market Committee adjourns from its two-day meeting this afternoon and is widely expected to lower the Fed Funds Rate.  This does not mean that mortgage rates are being lowered, too. The definition of Fed Funds Rate from the Federal Reserve: The federal funds rate is the rate charged by one depository institution […]

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Retail Sales Data Gives Mortgage Markets Something To Chew On

October 15, 2007

Until this morning, mortgage markets had been somewhat dormant over the course of the week.  There was no new data for traders to chew, digest and/or spit out.  Mortgage rates sat flat because of it. Then, at 8:30 A.M. ET, the Commerce Department released Retail Sales data for September.  Mortgage rates are headed higher this morning on […]

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Like The Fed Funds Rate, The Fed’s Discount Rate Does Not Control Mortgage Rates

August 21, 2007

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 banks borrow money from the […]

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The Week In Review (August 13, 2007) : What To Watch For

August 13, 2007

After all the volatility and talk of a global crumble, all of the major U.S. stock indices posts gains last week.  It just goes to show you what a strange roller coaster ride we’re all on. Last week, the market bounced its way through: The Fed’s press release stating that inflation is still a concern […]

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What If You Got To The Closing Table And The Money Never Showed Up?

August 3, 2007

Several high-profile mortgage lenders, including American Home Mortgage, closed their doors this week and stopped funding loans.  Others dramatically limited their list of “eligible” borrowers. Many buyers and sellers across the country have been stranded at the closing table without funds this week, only adding to the confusion. Because the story is not getting much […]

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The Biggest Banks Are Eliminating The Most Prevalent Sub-Prime Loan

July 24, 2007

Mixed news from the sub-prime sector, depending on how you look at it. Many lenders discontinuing their short-term ARM products. Washington Mutual, Countrywide and Wells Fargo are among the sub-prime lenders no longer offering the 2/28 mortgage product. The “2/28” is a adjustable rate mortgage in which the interest rate remains fixed for two years, […]

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Before You Rush To Make Bi-Weekly Mortgage Payments…

July 11, 2007

Before paying down your mortgage balance with extra principal payments, be sure to plan carefully. The biggest risk in lending for banks is that you will suddenly stop paying your mortgage.  In that event, the banks hope that you owe them as little as possible against the value of the home. That way, your mortgage balance […]

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How Lenders Protect Against Losses When Mortgage Markets Deteriorate

May 23, 2007

The graph at right shows the path of mortgage rates in May.  The rate run-up continued yesterday. After a fairly tame start, yesterday’s action rapidly slipped away from mortgage rate shoppers beginning at 12:00 P.M. ET. Many lenders responded by invoking their right to a mid-day reprice as well, with some adding as much as 0.25% […]

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The Week In Review (May 14, 2007) : What To Watch For

May 14, 2007

Last week in the mortgage markets was thick with hype and thin with action. Whenever the Fed meets, there is potential for wild swings in mortgage rates.  And, although the Fed doesn’t control mortgage rates, it’s views on inflation and the economy carry tremendous weight with traders, with economists, with banks, and with governments across […]

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Why “Prime Rate” Is A Name And Not A Number

May 2, 2007

Pop Quiz: Which interest rate is lower?  8.25% or Prime Rate? If you answered anything other than “they are the same”, then you can understand first-hand why banks refer to Prime Rate by name instead of by number. It’s a neat little piece of sales psychology that keeps people from recognizing their true cost of […]

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The Fed Sets The Fed Funds Rate Sets Prime Rate

March 21, 2007

This afternoon, the Fed adjourns after a two-day meeting and it is widely expected that they will leave the Fed Funds Rate unchanged at 5.250%. So, what is the Fed Funds Rate and why does it matter to everyday people? The Fed Funds Rate matters to you and me because it is used to calculate […]

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