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The Mortgage Bankers Association reported today that the demand for home mortgages cooled last week as rising home mortgage rates curbed refinance loan requests that had soared to a 14-month high. Home mortgage loan requests to buy homes rose for the second straight week to the highest level since the end of June, but hovered just above 13-year lows. Home refinancing still represents nearly 8 out of every 10 home loan applications.
Many consumers doubt that job market improvement is around the bend, and lending standards remain tight, putting home buying out of reach even with borrowing costs near record lows. The industry group’s mortgage market index fell by a seasonally adjusted 4.4 % in the week ended July 23. A 5.9 % drop for mortgage refinance applications overshadowed a 2.0 % rise in home purchase loan demand.
The average 30-year mortgage rates climbed to 4.69 %, up 0.10 percentage point in the week from the lowest level since the group starting tracking rates weekly in 1990. Low borrowing costs and high affordability drove the slight pick-up in home buying demand from extremely depressed levels in the wake of now-expired federal tax credits. Homebuyers rushing for up to $8,000 in tax incentives had to sign contracts by April 30, which fired up spring sales at the expense of summer transactions.
Sales of new homes surged in June, yet posted the second lowest level in 47 years of record keeping, the Commerce Department said on Monday. The weakest level was set in May on the heels of the credit’s expiration. “It’s just an indication that demand for housing at the moment is very weak given that the incentives have just come off,” said Bob Baur, chief global economist at Principal Global Investors in Des Moines, Iowa. Housing is bottoming now, fighting strong headwinds created by unemployment flirting with 10 %, he said. “Consumers are clearly worried about economic growth that is seen to be faltering somewhat,” said Baur, who thinks chances of a double-dip recession are slim.
In most cases a pre-qualification is a written letter from a mortgage lender stating that the borrower is eligible for a home mortgage loan up to a certain loan limit. (ie. Bank of America Home Loans has pre-qualified Johnny Example to buy a home up to $500,000.) A pre-qualification letter is usually created after the borrower shares their information and the mortgage lender will examine their credit report and income documentation. However, the prequalification analysis is only an estimate of the maximum the borrower is qualified for. There is no commitment on behalf of the lender and considerations like mortgage rates and loan programs are subject to change.
In most cases, a mortgage pre-approval is a written letter that includes a loan decision from the underwriting department after a borrower completes the residential loan application. Usually, a borrower can apply for a pre-approved home loan prior to signing a purchase agreement for a home. Many mortgage lenders will also enable the borrower to lock the interest rate at the time the home loan is pre-approved. A pre-approval is a great negotiating tool for home buyers because it lends them credibility and helps the seller make a decision on their perspective offer.
Many first time home buyers prefer FHA mortgage loan options because these loans only require a 3.5% down-payment. For homebuyers with a military background we recommend VA mortgage programs because they require no down-payment. VA home financing is available up to 100% even for first time homebuyers.
Use this Pre-Qualification Mortgage Calculator below to see what home loan makes sense for your needs.
Low mortgage rates and loan modification plans may not be enough mortgage relief for struggling Gulf coast borrowers.Freddie Mac said Thursday it was invoking a mortgage relief policy for borrowers hurt by the massive oil spill in the Gulf of Mexico, echoing similar moves by sister company Fannie Mae a day earlier.Housing expenses can be a growing concern, so by offering forbearance and home refinance incentives struggling borrowers may get the mortgage aid they need until things get better in the region.A massive oil slick spreading from a BP PLC deep water well has been distressing local economies along the Gulf Coast. Large swathes of the Gulf have been cordoned off from fishing and globs of oil on beaches threaten tourism dollars. Even some in Gulf oil industry have been diverted from normal work due to a moratorium of any deep water offshore drilling after a rig explosion started the leak.
Freddie said Thursday its forbearance policies let servicers suspend a borrower’s mortgage payments for up to three months or reduce payments for up to six months. They can recommend forbearance for up to 12 months, in some cases. As long as borrowers stick to their forbearance agreement, servicers must not accrue or collect late fees.“We are instructing our servicers to work with borrowers with Freddie Mac-owned mortgages to extend forbearance of mortgage payments where appropriate to help them stay in their homes as they navigate through this financial hardship,” said Ingrid Beckles, a Freddie executive in default-asset management.
On Wednesday, Fannie as well as Citigroup Inc. unveiled mortgage relief measures for troubled homeowners on the Gulf Coast. Fannie said it may suspend or reduce mortgage payments for borrowers whose properties or income suffer, while Citi announced a three-month suspension starting Thursday of foreclosure sales and notifications, and evictions on possessed properties for qualifying borrowers in the Gulf region with first mortgages held by CitiMortgage.Freddie shares were down 29% at 54 cents Thursday, continuing a drop from Wednesday when the company’s regulator told both Freddie and Fannie to delist from the New York Stock Exchange.
Home mortgage rates continue to make mortgage refinancing and home buying more affordable than ever.The home loan demand continues to rise for borrowers seeking first time home buyer loans.Home foreclosure rates continue to break records ever quarter across the nation.We saw a significant surge in refinance loan applications in April as the homebuyer tax credit expired. Home sales prices are down and that and record low home loan rates seem to motivate first time home buying. Today loan applicants may be eligible for 30-year mortgage loans with fixed rates as low as 4.625%.
Many potential home buyers have reconsidered buying because mortgage loans for people with bad credit have gone away. FHA and VA mortgages offer more flexibility with credit, but they are not subprime loans that accept bad credit without documenting income and demonstrating to the underwriter that the borrower is a low risk for defaulting because they have the ability to make their loan payments on time.
VA Home Mortgage Loan Co.com announce a new promotion for the military in California.According to California VA lender, any California VA loan will be originated with discounted lending fees.Underwriting and processing fees are standard lending costs for most mortgage refinancing transactions, but for the next 30 days, California military families can save by not having to pay for these traditional closing costs.
“We have always had a lot of loyal VA customers in California,” Tom Howard said.VA mortgage rates have been at record lows in 2010, but these incentives won’t last much longer.See the original article online, California VA Loan Incentives.
The government offers two popular home mortgage products, the VA loan and the FHA mortgage. Both are great home loans, but there are significant differences and requirements top qualify.
VA Home Loan Opportunity for Military Borrowers
In most cases, VA mortgage loans are offered to the military, who want to buy or refinance a house but do not want to put more money down or pay more for upfront lending costs then they have to. VA finance programs are available for active military and veterans who have the VA loan eligibility.For existing VA borrowers, VA refinancing is simplified greatly with VA streamline loans. If you have saved a significant down payment, it may actually be less expensive for an applicant to choose a conventional home loan that does not charge the VA funding fee. There other home mortgage loans that offer benefit without going the VA financing route. HUD’s FHA mortgage product offers an alternative for low-income borrowers, so consider applying for a FHA mortgage loan.
FHA vs. VA Home Mortgage Programs
FHA home mortgage loans are available to borrowers from a non-military background through the Federal Housing Administration and are similar to VA loans in that they are secured. FHA loans do require a 3.5% down-payment.So on a $300,000 loan, the FHA borrower would be required to come up with a $10,500 down-payment. The VA loan is a 100% financing option so going with the VA mortgage would save a qualified borrower $10,500 because it is a no money down loan. FHA mortgage loans also require mortgage insurance. The MI may be minimal if the home is bought for a price significantly below the market value of the home. Consider your financing options carefully to make sure that you are getting the best loan for you: your credit score, income, home price, home value, and amount of money available for upfront costs.
Mortgage rates dropped again this week.According to a Freddie Mac survey, the further uncertainty in Europe pushes the average home mortgage rate for a thirty-year mortgage to 4.84%.Home loan rates continued to fall toward record lows this week as fallout from the European debt crisis. The flat inflation also helped keep rates intact and American borrowers will continue to have affordable financing opportunities for home buying or home refinancing. Investor flight to the safety of U.S. government securities has pushed yields down on Treasury bonds. And mortgage interest rates have followed, with lending companies offering an average interest rate of 4.84% on 30-year fixed-rate home loans, mortgage giant Freddie Mac reported Thursday.That was down from 4.93% a week earlier and the lowest average rate since December.
The mortgage lenders surveyed by Freddie Mac this week were offering 4.24% on average for fixed-rate, 15-year home loans. That’s the lowest level at least as far back as August 1991, when Freddie Mac began tracking rates on 15-year loans.For both thirty-year and fifteen-year home loans, lenders were charging upfront fees equal to 0.7% of the amount borrowed. Home loan rates also have been pushed down by a U.S. inflation rate that the government said Wednesday had dropped to a 44-year low of about 1% over the last year. The low mortgage rates, a stabilization of home prices and the federal government’s temporary home buyer tax credits have reinvigorated business for Laguna Niguel loan broker Jeff Lazerson, who said he had “one foot in the mortgage broker graveyard” for most of the first quarter of this year.“My business is back from the dead,” he said, adding that the expiration of the tax credits at the end of April hadn’t dampened business.
The Freddie Mac survey asks mortgage lenders the home mortgage rates they are offering to well-qualified buyers able to make at least a 20% down payment or who have 20% equity in their homes if they are mortgage refinancing.The article was written by Scott Reckard for the LA Times.
Assistant Housing Secretary David Stevens told Senate lawmakers Thursday the Federal Housing Administration’s “elevated role” in helping ensure that home mortgage financing remains available is “temporary.”The Federal Reserve has kept key interest rates at record lows and more often than not, mortgage lenders have extended mortgage relief efforts to help stem the foreclosure crisis.
Mr. Stevens also oversees FHA as its’ commissioner, said that FHA has to strike a delicate balance with providing private home financing to qualified families, while avoiding a complete takeover of private sector business. He said HUD must be sure not to disturb the FHA home financing in this fragile real estate market with aggressive actions.“Until the private sector can step back up, they need FHA mortgage products and our housing market will benefit from it,” he said.
Freddie Mac said last week that North Carolina mortgage rates had reached their lowest level of the year. home refinancing activity rose significantly last week and home purhcase loan application volumes remained steady in Georgia and North Carolina. The average sales price in April was $210,410, up 0.2% from a year ago and 2.2% above March’s average.On average, homes sold last month in the Charlotte North Carolina area were on the market for 122 days before their sales closed. That’s four days longer than in March. The National Association of Realtors reported the following home sales info for the North Carolina region.
Many consumers have been asking me about no cost home loans. The questions I get are — What is the catch with no cost mortgage loans? — How do I qualify for no cost refinancing?
Let’s address these questions first. In most cases there is “no catch” with no cost home loans, but you need to understand the implications between a no cost mortgage and a traditional home loan in which the lender fees are tackec on to the mortgage. In most cases a no cost refinance may have a slightly higher interest rate than a loan in which you pay the lendeing fees. Third-party fees do exist in any mortgage transaction and no one is working for free. When a lender offers a no cost loan, in most cases they are paying your lending fees from the “yield spread premium”, which is paid by the bank to them for the interest rate they charge you. The higher the interest rate you pay, the more the bank pay them on the “backend.”
When considering a no fee mortgage, consider the following factors: 1. How Long do you plan to live in your home? (if you are planning on keep this loan for at 10 years or more, the lower interest rate mortgage option paying the lender fees usually comes out less expensive for you.) 2. Do you need the tax deductions that are associated with lending fees? (Ask your tax consultant, because many people write off the lending fees in addition to the interest they pay on their mortgage. This means it may benefit you to have lending fees.)
No cost home loans have their advantages, but they may not be for every borrower. If you are interested in no cost refinancing make sure you keep your credit scores high and that you can document your income.
Years ago several law firms developed a unique program to combat the cost, time, and pain associated with traditional audits. The Opening Audit Program for FHA mortgage lenders has become an important program and is more relevant than ever with FHA loan reform, home value conditions and the need to have an FHA license to survive in the current home financing marketplace. Lenders can obtain FHA licensing in six weeks.
We form a holding company of your existing business; and then form a new entity which will be a wholly owned subsidiary of the parent company. The new company may also be a standalone entity if the client wishes; and the firm can pursue a separate state license simultaneously for qualification purposes. The client will then contribute the required assets to the new corporation for FHA purposes; which is $ 63,000.00. Keep in mind that only 20% of this must be in liquid assets; and that many other forms of assets can be used to qualify according to GAAP accounting.
An outside CPA firm of the clients choosing in their marketplace is indentified to perform an “Opening Audited Balance Sheet of the new FHA lending entity. The client can use their CPA firm if they are qualified to perform audits; or the firm will assist with relationships that we have with CPA firms in every market. Keep in mind that the opening audit could be as easy as writing a check for deposit to be verified. This procedure and process takes about an hour of CPA time; and about $ 1,000.00 of cost depending upon the market you are in. This is a tremendous time and cost savings to traditional audits that could cost up to $ 20,000.00; and take three to four months to perform. You can obtain your FHA license in six weeks from filing, and it takes our firm about two weeks to be in a position to file your FHA application once this information is gathered.
Additionally, if the new entity keeps there originations to FHA loan products, and structures there year end of the business to a June 30th or September 30th year end; it will further allow you cost and time savings by positioning the new entity to coincide away from tax season. This puts you in a great position to negotiate the best rates for further audits; as you have minimized the originations and activity in this business, and CPA firms will be in the summer months seeking business to perform.
FHA rates on thirty-year fixed rate mortgages have dropped to record lows. But, it remains difficult for many for all homeowners to qualify for mortgage refinancing.105% rate and term refinancing is now available but you must have a mortgage that is serviced by Fannie Mae or Freddie Mac.
FHA home loans have created a new opportunity for some borrowers to refinance into a fixed rate or get a loan modificationif they meet the Hope for Homeowners criteria.No jumbo mortgages are eligible for this unique refinance opportunity.Discuss your criteria with your mortgage lender or loan officer and lock into low FHA mortgage rates.
Watch Mortgage Rates Video
The Associated Press reported that the mortgage market may get another lift if there are more signs the economy is at least not getting worse.The Federal Reserve has renewed his commitment to low interest rates in an effort to stabilize the declining housing market.
President Obama launched the Making Home Affordable program seeks to simplify the refinance and modification process for existing mortgage terms for homeowners. Under the plan, an estimated 9 million borrowers will qualify for more affordable mortgages and be able to stay in their homes.
Under the program, applicants must have a loan in good standing with Fannie Mae or Freddie Mac. Borrowers do not have to be behind on their mortgage to qualify. The mortgage payment, including taxes, insurance and homeowners association dues, must exceed 31% of the borrowers’ gross monthly income. In addition, borrowers cannot owe more than 105% of their home’s current value. Real estate and loan officers would like to see banks ease up on the reins and take more steps to work with distressed borrowers struggling to remain in their property.
For many people, that will be almost impossible. Pat Lotz said many people are upside-down on their mortgages, meaning they owe more than the current value of the home.She recommended that homeowners contact their mortgage lenders as soon as they start having financial problems and ask if there are any mortgage loan modification plan they qualify for. She said these programs could provide much-needed assistance, but it does require patience.
Lotz said she would like to see banks look at individual portfolios and personal situations when making decisions. She also wants to see banks make more funds available. “I would like to see banks releasing money from the bailout,” Lotz said. Branch Manager of John Adams Mortgage, John Millard said, “It’s not trickling down to the homeowners.” Millard continued, “I definitely think the banks could do more and only 1% of his business involved the FHA just a few years back. Today, FHA home loans account for 90% of his business. He said the FHA requires lower down payments and doesn’t penalize people with lower credit scores.
Homeowners seeking a short sale in which the bank waives a portion of the loan should anticipate a long process between three and six months. She has heard from residents who have not heard back from banks when they called for assistance. Millard said Obama’s refinancing and loan modification program is geared to help borrowers who are struggling to make their mortgage payments and could be facing home foreclosure. His biggest concern has been the significant decrease in property values and this loss of equity that has been driven by foreclosures and the credit crisis. Unfortunately, homeowners rarely are approved for mortgage refinancing when their home values have tanked.
Most housing markets saw no change in their maximum FHA loan limit when the government restored higher limits that had been in effect for most of 2008, even though house prices declined in almost all areas of the country. The same 20 real estate markets needs the higher loan amounts of $729,750 outlined by the FHA loan limit.
Good news for first time homebuyers and existing homeowners who need higher loan amounts for refinancing purposes. Most real estate markets saw little change to their maximum FHA home mortgage limit when the government renewed with higher home loan limits even though home prices dropped dramatically in almost all areas nationally.
The House of Representatives passed a home mortgage loan bill containing the long-awaited fixes to FHA’s Hope for Homeowners loan program late last week, and the Senate could begin its deliberations as early as next week. The measures are attached to H.R. 1106, a controversial mortgage relief bill that would enable bankruptcy judges the authority to cram down borrowers’ mortgage loan balances when they file for Chapter 13 bankruptcy.
In a recent article written by John Adams, borrowers in Atlanta were please to learn that the maximum loan amount was raised from $417,000 to $729,750 in some of the high cost regions. So now, borrowers with good credit may qualify to refinance and reduce their monthly loan payments for better cash flow from the savings. The mortgage refinancing details of the Obama mortgage relief plan can only help the sluggish housing market in the Georgia.
The second, and perhaps more ambitious, part of the president’s plan revolves around enticing home mortgage lenders to voluntarily modify existing loans for homeowners who are in imminent danger of losing their home. Under this plan, borrowers would see their interest rates temporarily drop to as low as 2%, in an effort to make their total housing expense fall under a 31% of gross monthly income cap. When this foreclosure prevention plan was announced, I wondered what would happen to those borrowers for whom the 2% home mortgage loan was still above the 31% threshold. Here’s the answer. In a bold move, the proposal will allow lending companies to extend the mortgage amortization schedule to as much as forty years, or, if necessary, even accept principal payments without interest. This departure from traditional repayment guidelines is nothing short of remarkable and shows the extent to which the plan hopes to provide mortgage relief.
A final feature of the plan was also made clear, and it is the incentives that lenders may receive for voluntarily participating negotiations with completed loan modifications. Lenders can receive as much as $6,000 in direct incentive payments if a mortgage is restructured and the borrower stays on track for a minimum of three years. In addition, there will be more insurance payments to holders of home loan modifications linked to declines in local home prices. The amount of those payments is still unclear, as it may relate to how many lenders choose to participate in the modification program.
Many mortgage industry insiders want to know, what happens to lenders who simply refuse to refinance or re-work a borrower’s mortgage under the president’s plan? At this moment, it looks like Congress is set to allow bankruptcy judges the ability to modify loan terms and balances when they see fit. Such unprecedented powers strike fear in the heart of lenders everywhere. What good is a loan when a judge can arbitrarily reduce the balance, lower the mortgage interest rate, or even both? My guess is that most mortgage lenders will jump on the “stability and affordability” bandwagon and take their medicine as quickly as possible.
There are many benefits and disadvantages to both home equity lines of credit and home equity loans.Borrowers should carefully consider the pros and cons making the selection between these home equity vehicles based on your unique needs and circumstances.
Loan Amounts Available
Both home equity loans and lines of credit allow you to borrow up to 100% of the equity in your home. In some cases, lenders will even allow you to borrow up to 100% of your home equity. However, in today’s market 90% is typically the maximum most home equity lenders willl allow.
Qualifying Requirements
Both fixed equity loans and credit lines require you to document the following:
üMust have good income (keeping your debt to income ratio under 45%)
üMust own home already (can’t get a second mortgage without out owning a property)
üYour existing mortgage must be current (no delinquencies on the mortgage)
üCurrent value of the home (70-90% Combined Loan to Value).
A home equity loan rates are typically fixed rate terms for 15, 20 or 25 year terms.Occasionally second mortgage lenders will allow borrowers to take out equity loans for up to thirty years, but they are usually in purchase money transactions. So, if you have yet to pay off at least that much of your home’s value, then your choice of which instrument to apply for is made for you.
If you wish to use the cash borrowed in a lump sum for a single, one-time expense (ie. Home remodeling, an emergency, or to consolidate credit card debt), then a home equity loan may be the better choice.
Rates on U.S. 30-year mortgages with fixed interest rates dropped for a ninth consecutive week, reaching their lowest level in 37 years, according to a survey released on Wednesday by home funding company Freddie Mac.Mortgage rates for 30-year fixed-rate mortgage dropped to an average of 5.10% for the week ending Wednesday, down from the previous week’s 5.14%, Freddie Mac said. Since Freddie Mac started the Primary Mortgage Market Survey in 1971, the thirty-year home mortgage rates have never been lower.FHA rates declined to 5.25% this week and many believe will promote new opportunities in 2009 for first time homebuyers.Mortgage rates dropped significantly after the Federal Reserve introduced a plan to purchase $500 billion of mortgage loan securities backed by government ie. sponsored enterprises, Fannie Mae, Freddie Mac, and Ginnie Mae.
Internet advertising firm, KMG president, Jason Cardiff said in a statement yesterday, “Rates for home mortgages will decline to unimaginable levels in 2009, because the American people need an incentive to start taking risks again in buying real estate.”Cardiff continued, “the banks need to trust restored as well and the only motivating reason for consumers to start borrowing again will be low mortgage rates.” Read the complete mortgage article>
The new administration clearly wants to free up credit markets to help correct the housing problems and foreclosure crisis.Low rates for home mortgage loans are almost as important to revising the lending guidelines to meet Main St. needs in the aftermath of this credit crunch.According to last week’s Mortgage Rate News released a survey by Freddie Mac that highlighted a historic low for conventional home mortgage loans on thirty year terms. FHA home financing remained strong as interest rates dropped to 5.25% for FHA mortgage refinancing as well.
President-elect Barack Obama and congressional Democrats have entered discussions over an economic stimulus package that could grow to include $850 billion in new spending and tax cuts over the next two years, a gigantic sum that some Democrats say could prove difficult to push rapidly through.There is no doubt that the President Elect will keep home financing and the freeing of the credit markets at the top of his list.
If you a military veteran and seek a guaranteed home mortgage, requiring no money down, then the VA mortgage might be the best bet for financing a new home. With no down-payment required, the Veterans Administration offers the last truly 100% mortgage financing opportunity.VA does require men and women to be military veterans, so this loan is not for everyone.
According to VA loan guidelines, the VA loan guarantee provides veterans and eligible spouses no down payment unless the home price limits are not met. The VA secures competitive interest rates and an assurance to the lender of paying off all or part of the loan in advance.
During the home financing process, the VA appraises the home to determine the Fair Market Value. The VA also requires compliance inspections on new construction to make certain the structure “Meets accepted standards of good construction” and “Conforms to the plans and specifications on which VA’s appraisal is considered.”
A home equity loan or equity line of credit can benefit homeowners in many ways financially. Managing your equity wisely is imperative for long term wealth.When taking out an equity loan against your home, one should consider if the loan purpose is worth the long term risk.
Consolidating credit cards with a debt consolidation loan to eliminate revolving high interest is usually recommended.Taking out a home equity line to pay for the cost of construction for home improvements that will significantly increase the value of your home is typically recommended as well.
Home equity credit lines carry variable rate interest, so once you have used the credit line it usually makes sense to refinance it into a second mortgage or FHA home mortgage loan with a fixed rate featuring simple interest.Simple interest is amortized annually and a portion of each payment goes towards paying off the loan.Don’t forget your home equity is a great asset that you may need some day for an emergency.When considering refinancing or adding a 2nd mortgage, remember that being smart with home equity increases your options down the road, so don’t play your equity options if you don’t have to.
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