loans

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 […]

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Cancel Your PMI Before It’s Too Late To Cancel It

June 12, 2008

When homeowners borrow more than 80 percent of a home’s value, mortgage lenders often require a corresponding insurance policy called Private Mortgage Insurance. PMI provides a cash payment to lenders in the event of a homeowner defaults. But because PMI policies are designed for high LTV loans only, they usually contain cancellation options for when home equity […]

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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 […]

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Simple Real Estate Definitions : Loan-to-Value

May 21, 2008

Loan-to-value is a math formula that represents the relationship between how much a home is “worth” and how much money is borrowed against it. Loan-to-value is often abbreviated as “LTV” and is one of the many factors that lenders consider when underwriting a mortgage application. The math formula is straightforward: In the LTV equation, Loan […]

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What Mortgage Fraud Looks Like

May 15, 2008

According to the FBI 2007 Mortgage Fraud Report, more than 46,000 cases of suspected mortgage fraud were reported last year.  This led to bank losses exceeding $813 million. If you’re looking for reasons why mortgage underwriting is measurably more difficult in 2008 — add “mortgage fraud” to the list.  Lenders now perform extra scrutiny on each […]

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You’re Not Immune — No Matter What Your Credit Profile Looks Like

May 7, 2008

Four times annually, the Federal Reserve surveys 84 different banks about general banking conditions. One of the survey questions asks about current mortgage lending standards and whether they are loosening or tightening. The chart at right is from the April 2008 survey and it illustrates what we already know: It’s getting tougher and tougher to […]

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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 usually […]

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A Simple Explanation Of “Credit Crunch”

April 8, 2008

News sources like to use the term “credit crunch” in describing the U.S. economy, but they rarely define what a credit crunch is and what it means for Americans. A credit crunch is when the amount of available loans suddenly decreases over a very short period of time. Usually, it follows a period of lending which, […]

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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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In 2008, Home Loans Are One Day Cheap And The Next Day Expensive

March 28, 2008

When mortgage rates change rapidly, it’s a fiscal challenge to shop for a home and/or home loan. Lately, mortgage rates have been especially volatile, mirroring the wild moves of the stock market. Here’s how up-and-down stock markets have been in 2008: Through last week, the S&P 500 Index changed more than 1 percent per day on […]

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Re-Approve Your Pre-Approval

March 20, 2008

Since December 2007, mortgage lending guidelines have changed very quickly and often without notice. Some of the more well-known changes include: Broad restrictions on stated income home loans Broad restrictions on 100 percent financing “Risk-based fees” for credit scores under 740 Some of the lesser-known restrictions relate to property type and occupancy status as well as […]

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Looking Back And Looking Ahead : March 17, 2008

March 17, 2008

Mortgage rates fell last week on growing evidence of a recession, but far fewer Americans were eligible to take advantage. Mortgage lenders continue to reduce product menus and that is leaving homeowners with fewer mortgage financing options than before. As an added hurdle, Fannie Mae and Freddie Mac recently added “risk-based” fees on all conforming […]

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Spreadsheet Formulas: Calculating Home Payments

February 22, 2008

For a lot of homebuyers, calculating a prospective mortgage payment is an online experience.  For example, a search on Google for “mortgage calculator” returns 39 million options. Some people, however, prefer to plan on their local hard drive using spreadsheets.  For these people, the hardest part is often figuring out what formulas to use. Interest Only […]

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What The New Conforming Loan Limits May Mean To You

February 14, 2008

The $168 billion economic stimulus plan signed Wednesday includes a temporary increase to conforming loan limits in some parts of the country. Currently, many homeowners whose loans exceed $417,000 are paying higher interest rates because their loans are not securitized the way that smaller loans are. The loan limit increase is intended to make housing more […]

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Looking Back And Looking Ahead : February 4, 2008

February 4, 2008

We entered the New Year uncertain of the country’s economic future. With January over, it’s a little more clear. Last week’s data and events helped firm expectations. In the near-term, we can expect weakness: The economy is shedding jobs Consumer sentiment is low Home sales continue to slump nationally In the intermediate-term, however, the picture […]

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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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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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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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