Smart Borrower Blog

Archive for the ‘Mortgages’ Category

Auto, Mortgage Rates Likely to Stay Low After Fed Decision

The Federal Reserve’s Federal Open Market Committee (FOMC) voted today to keep its key interest rate at or near zero for the next six weeks, and promised to leave it there for as long as two years. The Fed’s target interest rate influences many rates in the market place, particularly mortgage interest rates and auto loan rates. And even though the Fed sees the overall economy improving somewhat, it noted in a statement that “despite some signs of improvement, the housing sector remains depressed,” which is at least part of the reason that “economic conditions…are likely to warrant exceptionally low... more »

Existing Home Sales Lag As Underwater Homeowners, Foreclosures Drag on Market

After a few months of small gains, sales of existing home sales dipped in February, according to the National Association of Realtors, as the number of underwater homeowners reached a three-year peak and foreclosures continue to make up a significant market share. The NAR reported, as quoted in a Washington Post, that existing-home sales fell 0.9 percent last month, to a seasonally adjusted annual rate of 4.59 million, down from 4.63 million in January. Across the country, sales decreases in the Northeast and West off-set gains in the Midwest and South. In the Northeast sales fell 3.3 percent and 3.2... more »

FHFA Shows Little Sign of Allowing Mortgage Principal Write-downs

The Federal Housing Finance Agency, the regulator for mortgage giants Fannie Mae and Freddie Mac, does not seem interested in taking up the Obama Administration up on its proposal to allow the two companies to write-down loan balances for struggling homeowners. In a hearing Tuesday before U.S. senators, FHFA acting director Edward DeMarco continued to stick to his guns that principal write-downs are not “in the best interest of the companies.” Fannie and Freddie currently back about 60 percent of all existing mortgages and 75 percent of all new mortgages and have been under government conservatorship since the fall of... more »

Obama Announces New Mortgage Refinance Aid

On Wednesday, President Barack Obama announced some modifications to his administration’s previous foreclosure-prevention plans in hopes of extending relief to more struggling homeowners. “I am sending Congress a plan that will give every responsible homeowner in America a chance to save about $3,000 a year on their mortgage by refinancing at historically low rates,” he told an audience in Falls Church, VA as quoted in a New York Times article. “No more red tape. No more runaround from the banks.” The President did admit that previous efforts have been less effective than expected, but he said this new round of... more »

Fed Keeps Rate At Rock Bottom, No Changes Likely Until 2014

After its two day meeting, the Federal Reserve decided to leave its target interest rate unchanged, and also forecasted that it will not raise rates until the end of 2014. The federal funds rate, the Fed’s main method of affecting inflation and the economy, will remain in the range of zero to 0.25 percent for at least the next six weeks. It was predicted in a statement that, “Economic conditions…are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.” Low Fed rates have kept mortgage, car and student loan rates exceptionally low for... more »

Parents Helping Kids Get Mortgage Loans

In these days of economic uncertainty, many potential homebuyers are asking their parents for help. Today buyers are facing the most stringent lending standards in decades as well as a shaky job market. They are often in need of a good chunk of change in order to qualify for a home purchase. According to a survey from Better Homes and Garden Real Estate as reported in a CNN Money article , one in five baby boomer couples have already helped at least one of their children buy a house. That help has come in the form of giving cash for... more »

Home Prices Dip in September

Home prices across the nation fell in September, after posting gains during the spring and summer, according to the latest reading of the Standard & Poor’s/Case-Shiller index. Prices fell 0.6 percent from September to October, and 3.6 percent from the previous year. Out of the 20 cities tracked by the index, prices dipped in 17, breaking the five month streak where at least half of the cities showed monthly increases. “The plunging collapse of prices seen in 2007 to 2009 seems to be behind us,” says David Blitzer, chairman of the S&P index committee, as quoted in a USA Today... more »

Lawmakers Plan to Raise FHA Loan Limits Again

Congressional and senate lawmakers are seeking to raise FHA mortgage loan limits. Originally, FHA loan limits were raised during the housing crisis in 2009. As private lenders high-tailed it out of the market and government-backed agencies were left to pick up the mortgage lending slack, loan limits for loans backed by Fannie Mae and Freddie Mac were temporarily raised as well. In New York, Los Angeles, and San Francisco, where home prices were above the $625,000 loan limits, Congress temporarily raised the loan imits to $729,750 due to the expensiveness of an area. This raise aimed to help people who... more »

Reverse Mortgages Draw Younger Crowds

A rising population of baby boomer retirees are changing the landscape for reverse mortgages. These loans that have historically appealed to older, single homeowners are now garnering more attention from the youngest qualifiers. The average reverse mortgage applicant today is around the age of 62 or 63, according to Peter Bell, president of the National Reverse Mortgage Lenders Association (NRMLA) as quoted in a Reuters article. And whereas older widowed women were the major borrowers about 15 years ago, now mortgage companies are most likely to see boomer couple applying for the loans. A reverse mortgage is a loan against... more »

Student Loan Debt Reaches Record Levels

Total student loan debt in the U.S. has surpassed national credit card debt, according to new figures from the Federal Reserve Bank of New York. New student loan funds borrowed last year grew to $100 billion dollars, a record high, and now total outstanding student loan debt has reached $1 trillion for the first time in history. Full-time undergraduate students borrowed an average of $4,983 last year, according to the College Board. That figure is more than double the average from 10 years ago, after adjusting for inflation. In the wake of the current economy, default rates on student loans... more »