loans

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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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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The Cost Of Living Includes The Cost Of Gas And Food (And May Get More Expensive Through The Winter)

November 16, 2007

October’s Consumer Price Index was released Thursday and showed a 3.5 percent increase in the cost of living since October 2006. The report also showed a core inflation rate of 2.2 percent. The “core CPI” is a smaller part of the overall CPI. The math is the same, but it specifically excludes cost changes in […]

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Where You Find Speculators, You May Also Find Failures

November 14, 2007

This morning, RealtyTrac released its Q3 2007 foreclosure data for the United States. The leading cities for foreclosures are: Stockton, CA (1 per 31 households) Detroit, MI (1 per 33 households) Riverside/San Bernardino, CA (1 per 43 households) Fort Lauderdale, FL (1 per 48 households) Las Vegas, NV (1 per 48 households) Sacramento, CA (1 […]

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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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Just Because You Can Borrow From a 401(k) Plan Doesn’t Mean That You Should

October 19, 2007

According to the Wall Street Journal, the number of Americans taking loans against their 401(k) plans is increasing because most plans allow participants to borrow funds to purchase a home or to avoid foreclosure. But just because the avenue is there, though, doesn’t mean that borrowing from a 401(k) is a good idea. Here’s why: When you […]

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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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Making A Choice Of Mortgage Products Is Easier Today Than Most Days

October 11, 2007

In another sign that mortgage markets are a bit unpredictable lately, this morning’s mortgage rates are virtually identical for conforming fixed rate mortgages and conforming adjustable rate mortgages. This is an extremely uncommon market condition; usually, adjustable rate mortgages carry lower rates over their initial fixed rate period (i.e. 3 years, 5 years, 7 years) […]

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FHA Bans Seller-Financed Downpayment Assistance Programs

October 3, 2007

Effective November 7, 2007, the Federal Housing Administration is expected to ban home buyers’ use of seller-financed Downpayment Assistance programs. DPAs are (were?) very popular in FHA mortgage circles as a way to help buyers finance their new homes. FHA loans currently require a downpayment of at least three percent on a home purchase.  That three […]

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How Prime Rate Relates To The Fed Funds Rate

September 20, 2007

Prime Rate is currently 7.750%. Prime Rate is the “shorthand” name for the Wall Street Journal Prime Rate, a variable interest rate that is used in pricing many types of consumer loans. These loans include: Home equity lines of credit Credit card loans Auto loans Prime Rate’s variable nature is tied to the Fed Funds […]

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An Appetite For Jumbo Loans Returns

September 5, 2007

Yesterday was a rather drab day in mortgage circles — not much happened and mortgage rates idled.  The bigger story was how liquidity appears to be slowly returning to some areas of the beaten-down mortgage market. Specifically, liquidity is returning to prime, fixed-rate, full documentation jumbo loans and pricing appears to be improving (slightly). The […]

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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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The Week In Review (August 20, 2007) : What To Watch For

August 20, 2007

Again last week, financiers failed to answer the major question dogging Wall Street: What is the “right” risk model to use for mortgage lending?  The models of the past are being proven to have been wrong. So, why do risk models matter? Because the basic tenet of lending states that the riskier the loan, the […]

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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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