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The Week In Review (January 28, 2008) : What To Watch For

January 28, 2008

Mortgage rates change from day-to-day, but last week’s volatility was a record-breaker. After drooping through Tuesday and then skyrocketing Wednesday and Thursday, mortgage rates retreated slightly on Friday. By weeks’ end, rates were at their same levels from mid-December. This is in contrast to Tuesday, just after the Fed’s rate cut and before the stock […]

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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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It’s A Good Day To Have Your Mortgage Adjust

January 23, 2008

When the Federal Reserve lowered the Fed Funds Rate by 0.75% yesterday, it was in response to economic weakness that mounted since its last meeting December 11, 2007. By contrast, the mortgage markets meet every day. Because of this, mortgage rates had already “priced in” the weakness to which the Fed was reacting. This is […]

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Mortgage Rates Are Down (But Not Everyone Is Eligible)

January 18, 2008

Overall, mortgage rates are at their lowest levels since late-2005. Despite rates falling, however, not everyone can take advantage. This is because mortgage lenders started to tighten the guidelines of what they will lend and to whom, also beginning in late-2005. In other words, the chart at right doesn’t apply to all homeowners equally. If you are […]

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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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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 of […]

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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 of […]

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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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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 a one-time, quarter-percent […]

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Why Credit Card Holders May Benefit From The Fed’s Actions Today

December 11, 2007

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 American businesses and consumers.  When credit […]

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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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Your Credit Score Doesn’t Cost You Today, But In Three Months It Could Cost You Plenty

December 6, 2007

Credit scores are the best predictor of how a homeowner will pay on a mortgage, so it’s no surprise that credit scores will play a bigger role in mortgage financing in 2008. Actually “that date” is more clearly defined.  It’s March 1, 2008. For loans closing on or after March 1, 2008, Fannie Mae and Freddie […]

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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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On Random Rate Rallies And Thin Trading

November 20, 2007

Mortgage bonds staged a late-day rally yesterday, exaggerated by the holiday-shortened week and because trader participation is light. (We’ll revisit this theme several times between now and the New Year so don’t get tired of it.) When mortgage bonds rally, it means that demand for them is strong and that pushes mortgage rates down. Unfortunately for […]

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