home loan

Real Estate Term : Negative Amortization Home Loan

January 25, 2008

(Pronounced: NEGH-ah-tive am-ohr-tih-ZAY-shun) Negative amortization is the process by which a loan’s principal balance increases on a month-over-month basis. This is in contrast to a “typical” amortization schedule in which the principal balance decreases. Negative amortization is an optional feature on some home loans. These mortgages are usually referred to by the brand names “Option […]

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How The Stock Market Rally Was Terrible For Mortgage Rates

January 24, 2008

The Dow Jones Industrial Average surged 631.86 points in the last three hours of trading yesterday as traders piled into equities. Fueling the rally?  The bond market. For as much as stocks gained today, bonds lost.  Including mortgage bonds.  The dramatic sell-off created a huge swing in mortgage rates and erased nearly all of 2008’s rate improvements. […]

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What The Bank of America-Countrywide Merger DOESN’T Mean For Homeowners

January 15, 2008

For all that’s been said about the proposed Bank of America-Countrywide merger, what’s not getting talked about is how the merger will impact existing Countrywide customers. The short answer is that it won’t. A mortgage (and its corresponding note) is a legal contract between the lender and the lendee, signed on the date of closing. […]

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Why Making A Less-Than-20-Percent Downpayment Is Getting More Costly

January 10, 2008

Private Mortgage Insurance (PMI) is an insurance policy paid to a lender in the event that a homeowner defaults on his home loan. These defaults are up 35 percent over last year, according to an industry group — bad news for all homeowners requiring PMI with their mortgage. Much like home insurers adjust premiums after a […]

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How Congress Is Providing Tax Relief To Foreclosed Homeowners

December 21, 2007

After Thursday’s passage of the Mortgage Forgiveness Debt Relief Act of 2007, foreclosed homeowners have one less worry: taxes. When a homeowner defaults on a home loan, a mortgage lender will sometimes “forgive” the debt owed. One example is when a foreclosed home sells for less money than is owed on it.  The mortgage lender […]

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For Some Homeowners, PMI Is Tax-Deductible Through 2010

December 20, 2007

The resurgence of private mortgage insurance continues — if only because it’s aided by Congress. For eligible homeowners, lawmakers voted to extend the tax-deductibility of PMI through 2010.  The law was previously scheduled to expire at the end of 2007. For all loans originated prior to December 31, 2010, and within those years, private mortgage […]

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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 a one-time, quarter-percent […]

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Why You Should Remain In “Ready Position” For Your Mortgage Rate

November 28, 2007

Easy come, easy go. There was a strong rally Monday afternoon in the mortgage bond market.  It was sudden and furious, mostly coming on in the last 60 minutes of trading. When markets closed, mortgage rates for conforming home loans were grazing their lowest levels in nearly two years. It lasted overnight and into the […]

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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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It’s A Terrific Time To Revisit Your Mortgage Rate

November 2, 2007

If you bought your home in 2007 and your mortgage is a conforming home loan, you may be able to take advantage of  the current mortgage market conditions and lower your mortgage rate. As of this morning, mortgage rates are near their lowest levels of the year. Of course, not every conforming borrower is eligible. […]

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How Mortgage Calculators Can Be Misleading

October 16, 2007

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 figures 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 .38 and spits out an […]

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Jumbo Mortgage Rates Shed Some Of Their Risk, Rates Fall

October 11, 2007

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 move in the same direction over […]

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How Today’s Employment Data Is Hurting Mortgage Rates

October 5, 2007

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 Federal Reserve’s decision to lower the […]

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Americans Will Spend $179 Million More On Gasoline Today Than One Year Ago

September 27, 2007

Economists worry about rising oil prices because it tends to generate higher pump prices for Americans.  With more money spent on gasoline, there’s (theoretically) less money available to spend on goods and services. Today, GasBuddy.com says that the average price for a gallon of unleaded gasoline is $2.792, up from $2.344 last year at this […]

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How Credit Cards May Be Replacing Home Equity As A Funding Source

August 29, 2007

As mortgage guidelines loosened between 2002 and 2006, homeowners often used their home equity to retire credit card and other consumer debt.  They did this by increasing the size of the mortgage and taking “cash out” from their home. As you’d expect, this type of mortgage transaction is called a “cash out” refinance. Well, now […]

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The Week In Review (August 27, 2007) : What To Watch For

August 27, 2007

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 even more. When defaults exceed expectations, […]

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Why Private Mortgage Insurance (PMI) Is Suddenly Popular

August 22, 2007

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 typically sold to Wall Street, […]

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Why The Mortgage “Crisis” Is Not A “Crisis” For Everyone

August 17, 2007

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 are still BILLIONS of […]

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