Smart Borrower Blog

Archive for the ‘Home Equity Loans’ Category

Mortgage Demand Up 112.1 Percent As Interest Rates Fall

The volume of U.S. mortgage applications shot up dramatically in the latest week as borrowers sought to take advantage of low interest rates, according to the Mortgage Bankers Association Wednesday. “Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when the GSEs were placed under conservatorship,” said Orawin Velz, associate vice president of economic forecasting for the MBA. GSE stand for government-sponsored enterprises, meaning mortgage companies like Freddie Mac and Fannie Mae. “When rates plummeted following the Fed’s announcement that it would buy GSE debt and MBS [mortgage-backed securities], many of those on the... more »

Mortgage Interest Rates Fall on New Rescue Plan

Interest rates on long-term U.S. home loans fell in the latest week, a reaction to the newly announced Bush administration’s $800 billion bailout package to provide more liquidity for consumer and mortgage debt markets, according to data from Freddie Mac. “Interest rates for 30-year fixed-rate mortgages fell for the fourth consecutive week as signs the overall economy is flagging lowered most interest rates market-wide,” said Frank Nothaft, Freddie Mac vice president and chief economist. “And economic growth in the third quarter was revised downward this week, led by the first decline in consumer spending since the fourth quarter of 1991... more »

Mortgage Rates Rise, Applications Fall, and Officials Debate the Bailout

The U.S. mortgage industry saw rising interest rates and declining demand in the latest week, as officials in Washington battled over the Bush administration’s proposed bailout of several major financial companies. According to the Mortgage Bankers Association Wednesday, the average rate on a 30-year fixed rate home loan, excluding points, rose to 6.08 percent from 5.82 percent the previous week.  Rates on 15-year fixed rate loans averaged 5.84 percent, up from 5.54 percent and one-year adjustable rate mortgages carried an average rate of 7.01 percent, an increase from 6.95 percent the week before. During the same week, the MBA recorded... more »

Changes to FHA intended to Spur Borrowing

The latest word on the pending legislation with the economic stimulus bill is that the Senate and House are still ironing out some issues. The FHA conforming loan limit increase, from $417,000 to $625,000 as proposed by the House will be for a limited period of time only– two years. The increase would be even greater in high-cost areas, as much as $730,000 which is great news for those who couldn’t even begin to find a house under $625,000 in their area. This is for government-sponsored loans, like those of the FHA (Federal Housing Administration and GSE (the Government Sponsored... more »

ARMs Becoming Less Popular with Consumers

Freddie Mac recently released its 24th Adjustable Rate Mortgage Survey. The survey is taken during a given week, in this case the week of Dec. 17, and from 112 lenders. The results show that ARMs have dropped off recently, for the first time since 2003. Hopefully this means that borrowers are finally getting the message. ARMs are not “bad,” but it is important that mortgage holders understand all the ramifications of a fluctuating interest rate. Too often borrowers fall into the sunny-day trap, assuming the rate will remain fairly constant. Then when rates get too high (meaning they can’t afford... more »

First Time Home Buyer Programs

I am not sure when it started, but at some point in our home buying history, first time homebuyers got brownie points from banks.  Whenever I host home buying seminars, people always want to know about these programs.  However, over the years as a loan originator I have learned that when someone asks about first time home buyer programs, it really means that they don’t have any money for a down payment.  In my experience, being a first time home buyer is irrelevant for most transactions.  Banks are more concerned about your job stability, income, credit, and debts than they... more »

The Skinny on adjustable Rate Mortgages – Part 3

In part one of this series, we discussed ARMs, how they vary, and the downside of getting one. In part 2, we talked about adjustment periods and indexes. Today, let’s look at the rate caps and payment caps. Rate Caps  Rate caps limit how much interest the lender can charge you. There are two main kinds of caps that might be used on ARMs: A Periodic Cap limits how much your rate is allowed to increase from one adjustment period to the next. A Lifetime Cap limits how much the interest rate can change over the entire life of the... more »

The Skinny on Adjustable Rate Mortgages – Part 2

You hear a lot about ARMs, but a lot of people still find them confusing. The rate changes, they tell me, but they aren’t sure how. Arms aren’t all that complicated. Today I would like to try to clear up some of the confusion. An ARM, just like a fixed rate loan, has two elements: The interest rate and monthly payment. With a fixed rate loan those items stay the same. With an ARM, the interest rate changes –and that causes changes in your payment. Here’s how it works. On your loan there is a period in between rate... more »

The Skinny on Adjustable Rate Mortgages – Part I

Many people believe that when they take on an adjustable rate mortgage, if they don’t like the way it’s going they can “always just refinance.” In fact, that is what many lenders tell borrowers as an extra incentive to get them to take on the loan. However, this is not always the case. Many times when you get a loan, you are not able to re-qualify. This could be due to job changes, credit score changes, or even a change in the real estate market. If you are unable to qualify for a new loan, you are stuck with the... more »

Financing a Remodeling Project

If your remodeling or addition project is extensive, you may be wondering where the funds will come from. It is much easier than most people realize to get financing for a home upgrade–especially if you already have equity in the property. You may have equity because you have paid the mortgage down, or you may have it simply because the value of the house is higher than the amount you owe. The easiest way to get financing for a large remodeling project is by taking out a second mortgage on the home. You can choose between a home equity... more »