Smart Borrower Blog

Archive for December, 2007

The Bigger Picture

Anyone, unless they are living in an ice cave in the Antarctic, has heard so much about the mortgage crisis and the big meltdown that it has become blasé. From what we are hearing, no one should be able to get a mortgage at this time.  This is simply not true.  The focus on the mortgage crisis has been on people who have adjustable rate mortgages, and who have less than perfect credit.  Pure and simple.  Over eager investors and speculators have done little to help this situation, either. The Facts Opulent homes that are priced in the stratosphere are... more »

Mortgage Relief only for Some Borrowers

If you are one of the mortgage holders who has been hoping to get relief from the new mortgage relief plan, you should know that these are voluntary guidelines. Lenders are not forced to cooperate – and only some borrowers will get help with their mortgages. The Mortgage Bankers Association says that foreclosures are at their highest level across the board, not just in subprime lending — although that is the area that the administration-backed initiative is aimed at. Basically there are three options available to borrowers. The options are: Refinance the loan into a new private mortage move... more »

All Down Payments Are Not Created Equal

It is no secret that 100% financing is quickly going the way of dinosaurs in the mortgage market.  As such, many would be buyers are scrambling to figure out how they are going to come up with the cash to qualify for a mortgage. Many borrowers are fortunate enough to have rich uncles or parents who will give them the money for a down payment.  However, you have to be careful!  Lenders don’t necessarily allow gifts as down payments.  In fact, Fannie Mae underwriting guidelines require the borrower have at least five percent down in the transaction UNLESS the total... more »

Selling in a Down Market – Part 2

Earlier I wrote about selling a house in a down market and the first important factor, price. You can find Part 1 here if you missed it. Today I would like to discuss the second most important factor: the condition of the home. Experts say that if you want to sell your home when the market is slow, you’ve got to have top-notch real estate for sale. That means you must address four things: Cleanliness, curb appeal, minor repairs, and major repairs. Cleanliness is easy. Sweep, vacuum, mop, and dust. Throw away every single item that you can possibly part... more »

Election Issues & The Candidates

It seems like everything in this country right now is geared around the mortgage crisis.  It’s a good thing it is – we seem to be headed for a recession, and no one wants to see that.  Each week, it feels to me like all I report on is gloom and doom in the mortgage market.  I have to console myself with the fact that it isn’t going away any time soon, and that writing about it helps keep people informed.  And I guess that is why we are here. The Candidate’s Viewpoint With an election year coming up, it... more »

Too Little Too Late?

The Fed bailout is in the news, and the blogosphere is awash with topics on the subject. Although it may put an end to the horrible hemorrhaging in the housing market, that is about all it will accomplish.  Qualifiers and a gaggle of economists opposing the move will make it a lot less worthy than it appears to be.  What concerns me with the whole scenario is the fact that there is no guarantee that lenders and investors will buy in to this plan. Current Stats Looking to the current market, we see that more than 30 percent of borrowers... more »

The Bailout – What It Means

December 6th, Treasury Secretary Henry Paulson unveiled the new bailout program that is reported to help homeowners that face resets on their mortgages and are looking at possible foreclosure.  Seen as a benevolent act by the Bush administration, the outline makes me feel like I am not so sure that it is of much help. Who It Serves The plan is set up to target people that are facing a reset on the sub prime mortgages, and will not be able to afford to refinance.  That is well and good.  But the plan does not give any guarantee whatsoever, because... more »

Mortgage Rescue: Hope for Sinking Borrowers

Today we’ll find out what is in store for the mortgage industry according to the President. There is a plan, an agreement made by the Bush administration in conjunction with the mortgage industry that will limit changes in borrowers’ rate increases. If they are not able to afford the increase, the payments can be frozen at today’s level for five years. Most politicians agree with this freeze, as they say it will help keep foreclosures down over the next couple of years. Detractors say that there are two problems with the plan. First, it does nothing for the mortgagees who... more »

Higher Rates for Borrowers with Mediocre Credit

Thirty year fixed rates have been falling quite a bit over the past couple of weeks giving many loan officers a mini refinance boom.    The media has also been buzzing regarding the Federal government stepping in to assist borrowers by freezing interest rates on many subprime loans.  However, lost in all this madness is that Fannie Mae is making very significant changes in how conforming mortgages are priced that are going to stick it big time to borrowers with mediocre credit histories. It used to be that Fannie Mae’s loan pricing didn’t significantly take into account FICO scores.  For instance,... more »

Protect Yourself from Predatory Lenders

You hear a lot on the news these days about “predatory” lenders. Those are the lenders who use deceitful practices in order to cause people to lose their homes or their investment properties. They do things like: Ask borrowers to lie on the application. This could be a misrepresentation of their income, expenses, or even the amount of money they have for a down payment. Lend money knowing that the borrower is not able to repay it. Charge fees for nonexistent services or products Charge high interest rates that are not based on credit history like other lenders’ fee scale.... more »