home loan

A Few Good Reasons To Ignore Your Mortgage Prepayment Penalty

August 15, 2007

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 above, 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 in 2006 will reach its […]

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What’s The True Risk In Mortgage Lending? It’s Anyone’s Guess Right Now.

August 10, 2007

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 bonds were considered a […]

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The Week In Review (August 6, 2007) : What To Watch For

August 6, 2007

In a week in which several high-profile mortgage lenders closed their doors, not all news was bad. Mortgages rates for home loans bought by the quasi-government groups Fannie Mae and Freddie Mac actually dropped a bit. If you only watched the news, or market commentary on CNBC, though, you likely have the wrong idea about […]

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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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Trade In Your Automobile For A Larger Home?

July 17, 2007

The Bureau of Labor Statistics says that the average American family spends $614 a month on automobiles.  This includes finance payments, gasoline, repairs, and insurance. Let’s relate that $614 per month to home buying. Based on a 6.500 percent, fully-amortizing mortgage payment, that same $614 yields an equivalent of $97,000 in additional home purchasing power. […]

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How The End Of Credit Score Piggybacking Could Damage Your Credit Rating

July 12, 2007

Credit “piggybacking” used to be a handy way to boost a person’s credit score in order to help them get a home loan approval.  Starting in September, it’s going the way of the Dodo bird. Piggybacking involves linking one person’s strong credit rating to another person’s weak credit rating. By adding the latter as an […]

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The Week In Review (July 2, 2007) : What To Watch For

July 2, 2007

As expected, Ben Bernanke & Co. left the Fed Funds Rate unchanged at 5.250% last week but that didn’t stop markets from improving slightly overall. Markets were buoyed by a low reading on last Friday’s PCE index, the Fed’s favored inflation measure. Low inflation readings are good for mortgage rates so it’s no surprise that […]

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Be Wary Of Opinions That Masquerade As News

June 21, 2007

Is “news” always news, or is it masked opinion? When doing research on mortgages, it’s important to pay attention to the objectivity of your research source. Often, a writer will deploy key adjectives, phrases, and/or images that distort an otherwise factual story. This cartoon from clangnuts.com is a terrific example. It implies that interest only […]

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What Role Do You Play In This Rising Mortgage Rate Environment?

June 13, 2007

The American Consumer keeps spending. This morning, the monthly Retail Sales report showed a larger-than-expected jump.  Even after stripping out elevated gas prices, the sales increase was more than double the expected amount. The economy surges ahead, fueled by everyday spending, and this does not bode well for the future of mortgage rates. The recent […]

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One Method To Reduce The Amount Of Sub-Prime ARM Foreclosures

May 23, 2007

The graphic at right comes from The Wall Street Journal and it illustrates something that we all intrinsically know: Sub-Prime ARMs foreclose at a faster pace than all other home loan types. When adjustable rate mortgages reach the end of their “fixed rate” period, some homeowners are unprepared for the upward-adjusting mortgage payments and that […]

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Would You Have Answered The Mortgage Type Quiz Correctly?

March 27, 2007

The pie chart at right comes from a Bankrate.com survey, sampling 1,000 adults about their current housing situation. The question asked: What type of mortgage do you currently have? While the 34% “Don’t Know” figure is troubling, even more frightening is the 6% “ARM” figure. The sample size was small, but far more than 6% […]

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Sub-Prime Changes Freeze Out Homeowners

March 8, 2007

The snowballing in sub-prime lending is becoming an avalanche. Effective today, many lenders have discontinued 100% financing programs and other “piggyback” scenarios.  These types of loans represented the widest doors to homeownership for Americans in recent years. There are several reasons why a home loan applicant may be considered “sub-prime”, but the most common reason […]

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Sharing Your Credit Card Balances Can Lower Your Mortgage Rates

March 1, 2007

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 out his cards?” The ideal […]

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Mortgage Insurance Is Tax Deductible in 2007, But With A Catch

January 23, 2007

Adding complexity to the home financing process, The Tax Relief and Health Care Act of 2006 includes new tax code for homeowners.  The act grants itemized deductions for private mortgage insurance (PMI) and government mortgage insurance (MIP) expense premiums paid in 2007. For all loans originated in the 2007 calendar year, mortgage insurance is tax-deductible […]

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