A Few Reasons Why Now May Be The Least Expensive And Easiest Time To “Go FHA”

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Posted on in Consumer Education

A Few Reasons Why Now May Be The Least Expensive And Easiest Time To “Go FHA”

Shopping for low mortgage rates is a game of luck.  Some days, mortgage rates are favorable.  Other days, they’re not.  And while you can sometimes make an educated guess about where rates might be headed, you’re not always going to guess right. Even the experts get it wrong more often than they’d like. But some parts of the rate shopping process can be predicted and one of them is the future of mortgage guidelines.  In general, the more often homeowners default on their respective mortgages, the harder it is for future mortgage applicants to be approved. This is why “now” may be the best time to apply for a FHA mortgage.  Defaults are climbing, suggesting that FHA underwriting guidelines are about to tighten. Indeed, the FHA has implemented two major changes since last summer: The minimum downpayment requirement was raised by a half-percent to 3.5% Cash out refinances are now limited to 85 percent, down from 95 percent. These changes […]

by jberman
Posted on in Consumer Education

How To Know If Your Adjustable Rate Mortgage Will Adjust Lower

When conforming mortgages adjust, they’re often tied to an interest rate index called LIBOR. LIBOR is an acronym for London Interbank Offered Rate. But what LIBOR stands for isn’t as important as the role it plays. LIBOR is an interest rate at which banks borrow money from each other.  Therefore, when banks feel the banking system as a whole is unsafe, LIBOR rises to compensate.  It’s why LIBOR spiked last October after Lehman Brothers failed.  Financial institutions wondered what other institutions would fail and that added risk to the system. Since October, however, and because of massive government interventions worldwide, LIBOR has been on a steady retreat.  Moreover, with close to $30 billion in conforming mortgages scheduled to adjust by Labor Day, the timing couldn’t be better for homeowners with conforming ARMs. Typically, a Fannie Mae- or Freddie Mac-backed mortgage adjusts once annually.  The adjusted interest rate is always equal to some constant — usually 2.250 percent — plus the […]

by jberman
Posted on in Consumer Education

How To Know If You’re Eligible For A Making Home Affordable Refinance

April 4, 2009, marked the official start of the Making Home Affordable refinance program. Expected to help 5 million homeowners, the Making Home Affordable program “looks the other way” with respect to falling home values, approving mortgage applications based on borrower payment history and benefit to the homeowner. Not every homeowner is eligible for a Making Home Affordable refinance, however. There are 3 basic criteria that must be met. First, your existing home loan must be backed by either Fannie Mae or Freddie Mac. Thankfully, both companies provide online lookup services. Start with the Fannie Mae site because Fannie has a greater market share and because Freddie Mac’s site requires your social security number. Next, you must have a perfect mortgage payment history over the last 12 months. Even one payment made 30 days late disqualifies you from participating in the Making Home Affordable program. It is okay, however, if you were 20 days late on your payment and incurred […]

by jberman
Posted on in Mortgage Regulation

Bad for Consumers: The Mortgage Improvement & Regulation ACT of 2009 (MIRA)

Just when you thought that nothing more could be done to add to the confusion, noise, and attacks on the independent mortgage lender/brokers along comes the Mortgage Bankers Association offering of draft legislation veiled in the promise of national standards to protect consumers. Unfortunately, it appears that the real purpose is the MBA’s continuing effort to support additional controls on the independent mortgage lenders and mortgage brokers and hold them to a different set of standards than the MBA’s primary constituents – the federal depositories. The proposed legislation, The Mortgage Improvement and Regulation Act of 2009 actually offers tremendous opportunity for consumer and industry confusion in spite of its “mom and apple pie” objective to create national standards. This legislation, if enacted, references and brings back many of the negative provisions of HR-3915, it adds conflicting definitions for things such as qualified mortgage and high interest loans, and it generally promotes the control of independent mortgage entities in the name of consumer protection. In its 20+ pages: Yield spread is […]

by jberman
Posted on in Mortgage Rates

What’s Ahead For Mortgage Rates: April 6, 2009

Mortgage markets were up-and-down last week as rates fell Monday and Tuesday before surging higher from Wednesday through Friday. In some case, after touching all-time lows, conforming mortgage rates added a half-percent in the second half of the week, ruining some homeowners’ chance to refinance. It was the second week in a row that mortgage rates worsened. One reason why mortgage rates are up is because investors are turning bullish on the economy, even as it sputters. From investors’ perspective, the data is weak, but not as weak as it has been — or could have been. It’s a glass-is-half-full approach and it’s the opposite of how Wall Street worked in 2008. For example, from last week: Consumer Confidence measured a paltry 26.0 — but the reading was up from February’s all-time lows The Case-Shiller Index showed a big drop in home prices — but the report ignores strong housing data from the last 60 days Unemployment rates reached 8.5 […]

by jberman
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