Do you want to improve your contact and conversion rates with online mortgage leads? Watch this free webinar sponsored by Leads360 led by trusted lead technology companies. Call Lead Planet today and find out how integrating a lead management system like leads360 can improve your conversion rates for online mortgage leads. Read this Lead Management article > Mortgage Lead Technology
VA and FHA mortgage loans offer many unique benefits to consumers in the United States, but there are a few differneces between the two home loan products. FHA 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 percent loan to value option. If you go with the VA loan would save a qualified borrower $10,500 because it is a no money down loan. FHA mortgage loans also require mortgage insurance. The Read the original article online > Comparing VA loans to FHA Mortgage Loans
Clearly the Fed has played a significant role in helping the mortgage industry rebuild its foundation. It’s like the risky Payment Option ARM loans, subprime mortgages and no income loan products have vanished in thin air. The Obama administration and the Federal Reserve have certainly talked about mortgage reform and indirectly this has helped bad credit mortgage lenders and banks implement less volatile home loan products that may have previously unintentionally promoted predatory lending. At least for now it seems that the mortgage lenders who are still in business have a broader perspective than in previous years and maybe they are putting the borrower first.
According to Bloomberg News, the Federal Reserve understands that keeping key interest rates unchanged is critical for maintain affordable mortgage interest rates that will help the housing sector recover. 30-year fixed rate mortgage loans are available below 5% from most lenders nationally.
Cleveland Federal Reserve President Sandra Pianalto“For the next couple of years, I expect employment levels to remain well below what I would consider full employment,” and inflation will “only gradually drift up from its currently low level” to a mark that will nevertheless remain “subdued,” Federal Reserve Bank of Cleveland President Sandra Pianalto said. “This outlook warrants exceptionally low levels of the federal funds rate for an extended period of time,” she said. But she also noted there is “more uncertainty than usual around my outlook” and policymakers will need to apply more discretion than is typically the case. “It will be critical to monitor incoming information and respond as necessary to promote economic recovery and price stability,” Pianalto said. Pianalto, who made the comments in a speech before the Economic Club of Pittsburgh, is a voting member of the interest rate-setting Federal Open Market Committee.
Most mortgage executives remain confident the U.S. won’t fall back into recession — a survey released last week by the Federal Reserve Bank of Philadelphia showed forecasters lowering already reduced odds of a double-dip recession. At the same time forecasters have been pushing back odds of a Fed rate tightening. Pianalto said she is not looking for a particularly vigorous recovery. “Our journey out of this deep recession will be a slow one” because of the negative impact of long-term joblessness, coupled with “a heightened sense of caution on the part of consumers and businesspeople,” she said.
In addition to mortgage reform, the Obama administration plans to roll out its new loan modification program for the unemployed on July 1st 20101. Eligible homeowners could enter a forbearance program rather than a HAMP loan modification. The forbearance could suspend their monthly home loan payments entirely or reduces them to less than 31% of their pre-tax household income. Obama admin officials also plan to provide more details on the performance of the eight largest servicers in July. It will report the average time homeowners spend in the trial phase, the servicers’ handling of calls and problems and a review of whether borrowers were appropriately evaluated. This is another step in the government’s effort to put pressure on servicers to perform. The trial loan modification HAMP have clearly not been working for the “average Joe.”
The traditional mortgage refinancing option has become almost impossible for the average homeowner to qualify for because the lending criteria and FHA guidelines have tightened so significantly over the last two years. Most borrowers are unable to qualify to refinance because of home equity loss, so the HAMP modification program has become an important alternative to homeowners facing foreclosure.
No cost home loans may have some advantages, but they may not be for every borrower. According to Smart Home Financing, “Third-party fees do exist in any mortgage transaction and no one is working for free.” When a lender offers a no cost mortgage, in most cases they are paying your lender 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.” If you are interested in no cost refinancing make sure you keep your credit scores high and that you can document your income. Read the original article > No Cost Home Mortgage Loans
There are many mortgage loan companies out there that are excited to help you refinance your 1st and 2nd mortgages. You have probably seen advertisements all over the Internet and television for refinancing services. These refinance ads can significantly helps you because you have the opportunity to compare the many different mortgage refinancing options.
If you find that one mortgage lender does not work with you the way you would like you can always find a different lender somewhere else. With the competitive loan quotes you are in a position to get some of the best lending advice you have seen in years. Read the complete article > Home Mortgage Loan Rates.
Freddie Mac recently reported a 30% decline in July MBS issuance along with a 33% drop in the buying of mortgage loans that have been refinanced. Freddie Mac said it purchased $34.1 billion in refinancing loans in July, but Fannie has stopped reporting home refinancing volumes.
According to the company’s new monthly activity report, Fannie Mae’s issuance of mortgage-backed securities fell 39% in July from the prior month. The government mortgage giant issued $79.7 billion in MBS during July, compared to $130 billion in June. At the same time, its commitments to purchase loans rose 42% in July to $103.6 billion, a sign that residential production could be picking up.
However, their regulator reported that Fannie purchased 264,317 mortgage refinance loans in July and Freddie purchased 158,182 refinancing transactions. Based on Freddie’s average loan size, Fannie purchased approximately $57 billion in mortgage refinancing. Fannie also said 3.9% of its single-family mortgages in June were 90 days or more past due, up from 1.36% a year ago
Last week, government officials warned about loan modification scams and predatory mortgage aid offers from brokers and loan relief specialists. Homeowners should be alert and do their due diligence of companies, when considering refinancing for a loan workout from a company other than your existing mortgage lending company. Some of the reports have indicated that struggling borrowers have been paying fees of $2,000 to $5,000 in up-front fees to companies that promise foreclosure prevention. Some government officials say such operations are usually fraudulent because help is available for free from government-approved housing counselors. However, most people understand what kind of services they get for “free.”
QUESTION- Is it possible my payments will be higher?
ANSWER- If you’re still paying a low, intro rate, it is possible your monthly mortgage loan payment will increase more under the federal refinancing program. But the idea is to avoid the surprise interest rate adjustments and negative amortization that erodes your home equity even in a healthy housing market. In the last few years, 2/1, 3/1 and 5/1 ARM’s have sent shock waves through communities across the nation, because borrowers were suddenly hitting their variable rate period with no options to refinance into a reasonable fixed rate mortgage. After submitting a request for the Making Home Affordable program, your current mortgage lender should give you a “good faith estimate” that includes your new interest rate, mortgage payment and the total cost of the loan. Compare the numbers with your current loan; you might decide that refinancing isn’t an improvement. You can also check out the payment reduction estimator on the government’s Web site at http://www.makinghomeaffordable.gov.
QUESTION- Should I wait to see if mortgage interest rates come down in a couple of months before applying?
ANSWER- Probably not, since mortgage rates are at historic lows. Last week, rates on thirty-year mortgage loans inched upward to nearly 4.9%, but that’s still close to the lowest level since the Great Depression. Ken Inadomi, director of the New York Mortgage Coalition said, “Waiting for mortgage rates to drop further would be irresponsible and could backfire.” Even low intro mortgage rates should not be that much lower than fixed interest rates these days and in some cases, they may even be higher. So it’s probably in your best interest to lock in now to a low rate refinance loan that you can afford. Remember, the Making Home Affordable program expires on June 10, 2010. Read complete article > Is Mortgage Relief Melting with Loan Mod Scams
The Federal Reserve bond-buying binge may bring mortgage rates to their lowest levels since World War II. On the news that the Federal Reserve would buy as much as $300 billion of long-term U.S. Treasury securities, the rate on a 30-year fixed mortgage fell to 4.75% from around 5% on Wednesday.
Record Low Mortgage Rates Helping Homeowners Refinance
Still, the low rates–on top of the $8,000 homebuyer tax credit and price cuts on homes–may not be enough to entice buyers. As the Bloomberg story points out: If you’re worried about losing your job, buying a new home isn’t on your list of priorities. Plus, even if you’re game to jump into the market, tightened lending standards and new restrictions from Fannie Mae are making it difficult to get home mortgages.
The lower mortgage rates are hardly a game changer, writes analyst Josh Levin in a Citigroup research note on Wednesday. “We continue to hear from homebuilders about the inability of potential buyers to source even the minimum 3.5% down payment necessary for an FHA home loan. Also, homebuilders have run sales in which they have agreed to sponsor low mortgage rates and the uptick in sales has typically been marginal,” he writes.
And some folks are waiting out the market, hoping home prices have farther to fall. See the rest of the article > - Article written By Emily Friedlander
A recent mortgage lending survey offered a bird’s eye view of the home financing activity involving mortgage bankers, commercial banks and thrift and loan companies. In a recent article, Jason Cardiff told Mortgage Related News that he anticipates that the FHA mortgage rates could decline to 4.5% or even 4.25%.
Jason Cardiff also said, “The Federal Reserve has made its move to pump more blood back into the housing sector.” The index was 876.9, up from 723.4 a week earlier, the trade group said. Almost 73% of mortgage applications came from borrowers seeking to mortgage refinance loans at reduced interest rates, not home buyers. See the original article > Mortgage rates Decline as Refinance Applications Rise
Henry Paulson puts treasury behind Fannie Mae and Freddie Mac, in an effort to calm housing market with fluid lending from mortgage lenders.
Paulson said: He had the authority to buy unlimited stakes. Increase credit lines for business and mortgage loans that would help homeowners; He discusses borrowing directly from the Federal Reserve.
In a recent article, the chief economist for LendingTree, Cameron Findlay stated that borrowers need to have a few borrowing qualifications met to get the lowest mortgage rates. First, you’ll need a FICO credit score of 720 or higher, a loan-comparison website.
To avoid surprises, you should obtain your credit score before you apply for a mortgage loan, says Nancy Flint-Budde, a financial planner in Salem, N.Y. Your credit score is based on information in the credit reports compiled by the three main credit bureaus: TransUnion, Equifax and Experian. You can order a free copy of all three of your credit reports once a year at www.annualcreditreport.com. You’ll have to pay extra for your credit score.
Once you have received your credit reports, check them for errors that could hurt your score. If your reports show late payments make sure the info is accurately reported. The only way to repair the damage is by showing mortgage lenders that you can prove it was a mistake or “you must have change your ways”, says Craig Watts, spokesman for Fair Isaac, who developed the FICO score. That will take time, because you need to demonstrate a pattern of on-time payments. However, if your credit reports show large credit card balances, you can raise your score quickly by paying them off, Watts says. Your “credit utilization” ratio, which reflects to the amount you’ve borrowed as a percentage of your available credit, accounts for 30% of your credit score. Credit repair solutions are available if you need help getting errors and duplicates removed from your credit report. Read the complete story by Reporter Sandra Block>
In a recent article, James Sterngold considers the impact many consumers aren’t seeing in mortgage relief from TARP. As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasn’t succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that won’t lend to them.
While inter-bank lending rates have fallen since Congress approved the $700 billion Troubled Asset Relief Program on Oct. 3, most bank lending to consumers remains tight and mortgage rates were high. The average credit-card rate was 14.33% on Dec. 16, according to IndexCreditCards.com in Cleveland, almost unchanged from 14.41% in October 2007. That’s prompted criticism from Alan S. Blinder, a professor of economics at Princeton University in New Jersey and a former Federal Reserve vice chairman, who says the government should take a more active role as a stakeholder in the nation’s banks. “With the banks in a state of catatonic fear now, they’re just sitting on the capital,” Blinder said in an interview. “I don’t fault the banks one bit, since this shows Wall Street they’re safer, but then this doesn’t get you much improvement. If you’re taking money from the public purse, we should get something in return, and we’re really not.”
Jeffrey Garten, a professor of international trade and finance at the Yale School of Management in New Haven, Connecticut, and a Commerce Department undersecretary during the Clinton administration, says banks should be forced to increase their lending or risk having taxpayer money taken away. “The government isn’t acting aggressively enough to demand a quid pro quo,” Garten said. “The public good is the key to the private good in this case. It’s not the other way around.”
$8.5 Trillion
Although the government has committed more than $8.5 trillion to energizing the economy, and the Fed cut a key lending rate almost to zero, banks haven’t made it easier to borrow. The Fed said consumer credit fell by $6.4 billion in August, the largest drop in 65 years, and then by $3.5 billion in October, the first time since 1992 that there were two months of declines in a year.
In its most recent quarterly Senior Loan Officer Opinion Survey in October, the Fed reported that about 85% of U.S. banks said they had tightened standards on commercial and industrial loans to companies with more than $50 million in annual sales, up from 60% in July. 95% said they increased the cost of those home loans. About 70% said they made it more difficult to obtain prime mortgage loans, and almost 65% said they did the same for consumer loans.
Mortgage Rates
While mortgage rates have declined, they haven’t fallen as fast as bank borrowing rates, meaning financial institutions are demanding more profit for every dollar they lend. Average rates on thirty-year home mortgages fell to 5.14 % last month, according to data compiled by McLean, Virginia-based Freddie Mac. That’s down from 6.67% in June 2007, before the worst turmoil in the housing market. At the same time, the spread of mortgage rates over the 10-year Treasury bond yield rose to 2.958 percentage points from 1.567.
The spread of rates on so-called jumbo mortgage loans, those of more than $729,750, is close to a record at 1.6 percentage points above the rate for smaller mortgage loans that conform to terms of ones Freddie Mac and Fannie Mae will purchase, according to financial data firm BanxQuote in White Plains, New York. A year ago the difference was 0.23 percentage points.
High interest rates have angered consumers. The Fed has offered relief in the form of rule changes that allow banks to raise interest rates only on new credit cards and future purchases, not on existing balances. Banks will also have to give cardholders 45 days notice of changes in terms, up from 15 days. Those changes aren’t scheduled to take effect until July 2010. Read the complete article online >
Despite complaints that mortgage lenders and banks are not financing enough of new home mortgages, bankers say there’s plenty of money to borrow if banks agree that you are worthy of credit. In the case of business clients, that means banks are happy to lend to growing companies that can handle the payments. The Fed cut interest rates, but how many borrowers are being approved for mortgage loans? Can borrowers with bad credit refinance into an affordable payment or will they lose their home to foreclosure?
But even where banks are lending to sound businesses, they are tightening standards on new mortgage loan programs. In a distressed economy, they say, and with the example of so many failed mortgages around them, it makes sense to demand more security from borrowers. In a recent article, Bill Williamson, division president for Bank of the West’s Portland said, “When times were better, we were willing to make some exceptions off our guidelines and policies for well-run, growing companies.”
A bad credit score often leads to a mortgage lender denial of credit. So, if you have poor credit, and your fico scores are too low to qualify for FHA or non prime mortgages, you’ll need to find a lender that works with hard money.
The approval process for bad credit mortgages is a lot simpler than that of other home loans. The lender considers the property being used as collateral to determine whether it holds sufficient value for the investor/lender to be willing to take the risk of granting the loan. Most hard money lenders require the LTV to be less than 65%. The borrower’s current financial status and future potential is reviewed to calculate the debt to income ratio. And, because we recommend hard money loans only for a short-term solution of 6-18 months, so make sure there is no pre-payment penalty.
Many people in California are using Hard money mortgage loans for foreclosure bailout loans. But, they are not a good idea for mortgage refinancing unless you’re refinancing to help for foreclosure prevention. If possible, try to work out your financial issues with your creditors before trying for home refinance loans or home equity debt consolidation loans. Once you get to the point where your scores are high enough for a sub-prime loan (typically 540-619), then secured debt consolidation loans for consolidating revolving debt to pay off credit card debt will lower your payments and save money.
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