Smart Borrower Blog

Archive for December, 2007

Small Help for Homeowners

Private mortgage insurance, or PMI as it is commonly known, is insurance that covers the lender in cases where they feel that not enough money is placed as a down payment, and they wish to cover the cost of the loan.  A law enabling homeowners meeting certain criteria to deduct the cost of PMI, set to expire this year, has been extended to 2010. PMI protects the lender, not the home owner.  A typical PMI will add $50 to $100 to a monthly mortgage payment.  Deducting the cost of this insurance has been a help to homeowners.  Congress has now... more »

New Home Sales Way Down

The biggest thing in the news seems to be the fact that new home sales are way down – they have dropped to their lowest level in more than 12 years.  According to a Census Bureau report issued Friday, in November new home sales fell to a seasonally adjusted annual rate of 647,000.  Economists had predicted a 715,000 sales pace forecast, and it appears it has fallen very short of that.  Currently sales are down more than 1/3 from last year’s levels.  This is certainly not a local thing either, with sales in the Northeast down 28%, and in the... more »

Mortgage Applications Hit An All Time Low

America’s Mortgage Bankers’ Association is reporting a 7.6% slide in its application index through the week of December 21st.  This is the most it has dropped since the end of last year.  It is a good indicator of the current condition of the mortgage market. Borrowing costs are considerably lower now than they were in September.  It appears lenders have tightened up their lending criteria and are being a bit more cautious about whom they lend to.  One can pretty much attribute this to the massive bleeding in the market due to the sub prime debacle.  Prospective borrowers with good... more »

Minimum Credit Score Rising; Lenders Recommend Home Equity Loans

There are still a few days left in the year, and many homeowners are rushing to borrow money against the equity they’ve built up in their houses. That’s because in 2008 the minimum credit score required for a loan, at least for Fannie Mae, is jumping up to 680. This is bad news for the 27 percent or so of consumers whose score falls below 620, the previous minimum score requirement. Some lenders are urging homeowners to take out home equity loans, even if it is just for the purposes of creating an emergency fund. The equity in your home... more »

New Home Starts Remain Low

Despite all the recent publicity about the mortgage market and its effect on the housing market, one tends to forget about the segment that is most affected by the crunch: home builders. The National Association of Home Builders is predicting that they will experience another “rough patch” through 2008. The NAHB/Wells Fargo Housing Market index is at a record low. This is a score between 0 and 100 that describes the current condition of the housing market. A high score indicates a strong market overall; if the score is low, it indicates that the starts on new home construction is... more »

Hedge Funds And The Sub Prime Mortgage Market

I often times feel like the devil’s advocate for what I report on here at the Mortgage Mentor blog. I can guess that some people would accuse me of being a bit slanted in my way of looking at the current mortgage situation, and that I, as a self-proclaimed non-authority on the big business of finance, haven’t a clue. That may well be true, and I certainly feel that way some times. What I report on is the news. When I read in the news article by reporters and financial experts, it is their opinion on a subject that I... more »

And The Winner Is…

We have had the sub prime mess shoved down our throats for so long that it seemed a real relief to hear President Bush attempting to make a stand to help homeowners who were victims of the sub primes debacle.  I have written on this a lot this year, and have been very interested in what transpired.  Yet, the deeper I dig into this affair, the more I see that does not sit well. Who Benefits From Bush’s Plan? We would like to think that the homeowners facing foreclosure would be benefiting from the newest proposal.  Reality shows that very... more »

Seller-Paid Closing Costs

In a slow real estate market, sometimes it isn’t always about negotiating price.  Don’t forget to put the screws to the seller when it comes to your closing costs!  Depending on your area, closing costs can run approximately 2 to 3% of your purchase price.   This can be a significant burden for many borrowers. Conforming mortgage guidelines typically allow up to 3% of the purchase price to go towards closing costs for loan to values above 90%.  Six percent for loan to values less than 90%.  So if you are buying a $300,000 home for a primary residence, you could... more »

Mortgage Rates Rise Slightly

Are you one of the people who has been waiting to refinance your adjustable rate mortgage? If so, it’s probably time to stop waiting and take action. In spite of the Fed cutting rates a full point since the beginning of fall, interest rates are not dropping significantly – and no wonder, considering the past few years’ incredibly positive market. Fixed rate mortgages generally follow the 10-year Treasury bonds. Treasury yields went up last week, representative to some that the economy has became less of a focus to consumers. Seeing the job market hold steady, they’re feeling more secure and... more »

More On The Bailout

The Bush plan to help hurting homeowners has made strides in the landscape of the mortgage crisis, with approval of voluntary freezes on mortgages that qualify for the plan.  From the guidelines, it appears not too many people will be able to do that.  With an estimated 1.8 million sub prime mortgages ready to reset in upcoming months, the mortgage industry will see hard times, along with sub prime homeowners. They could see their mortgage payments increase as much as 30%.  To me, the key word here is “voluntary.” The current administration has always preached free trade to foreign countries... more »