Financial Literacy Month
For the first time ever, President Obama has said that it makes financial sense to refinance right now. He knows that there are billions of dollars that home owners could potentially save if they refinance at this time.
It’s financial Literacy Month. Are you avoiding a refinance because you might have to pay a point or a few thousand in closing costs? Even so, do you know what this could mean for your bottom line monthly and annually?
Example: Lets say you have a mortgage loan balance of $300,000 and you think you have a really good rate. If you were to refinance at a .5 lower interest rate, this could save you in the area of a couple hundred a month. Over the life of the loan, that could save you around $60,000 – big savings! This could help you save not only today, but toward your retirement, too.
Are you making financially smart decisions? Are you financially literate? Who are you getting your information from? Think about it and make the inquiry and at least see if it makes sense for you!
Please feel free to take a look at our current lender niches for more information.
What is the advantage of a PORTFOLIO Lender?
Filed under: Mortgage News | Tags: jumbo lender, jumbo loans, non agency lender, portfolio lender, use your own appraiser
Leave a Comment Well, for starters we can use our or your own Appraiser!
Portfolio lenders can provide good loans for good people because they lend their own money and therefor don’t have to conform to an investors pool of underwriting guidelines.
Because portfolio lenders can typically make their own decisions, they can afford flexibility to the borrowers. A Non Agency lender is a different world in terms of loan guidelines in this time of uncertain lender dependability. Don’t listen when your loan officer tells you that you can’t be helped because all there is for mortgage loan programs these days are fannie mae, agency or government product.
Here is an example
• Cash out refinances to loan amounts of $900,000 to 90% financing in most states. With Impounds as low as 3.30% as of this morning.
• Stand-alone 2nd mortgages/HELOCs – $350,000 max line amounts.
• Their prime rates at 3.25%, they can afford to offer these low rates too
• 1st lien HELOCS (Home Equity Line Of Credit)
• All HELOCS – 15 years to draw plus up to 10 more to repay
• Only 12 month mortgage credit history to qualify
• No price adjustment for cash out
• No mortgage insurance required
• Properties 1 day off MLS OK
• Manufactured homes OK, limited loan amount
• Interest only option OK
Good and worthy borrowers still deserve aggressive loan programs!
Housing Afforability and Pricing
Week after week as of late, economic signs are pointing to recovery in our real estate market.
Overall, the ecomony as a whole isn’t looking quite as good in that hundreds of thousands of jobs are still being lost every month across the United States – federal reserve board Chairman, Ben Bernanke, says the unemployment rate is likely to rise a little bit more before the economy diggs its way outl ater this year.
But for housing, most of the key indicators continue to point up..here’s the rundown:
- Pending home sales took a 3.2% jump last month, 2nd straight month of positive growth, these are signed home sale contracts that are scheduled to close in the next 30-90 days.
- Dr. Lawrence Yun, Chief Economist for the National Association of Realtors NAR says “we’re at the leading edge of the first time buyers responding to the very favorable affordability conditions, and the $8,000 tax credit.”
- Additionally, mortgage applications for future home purchases have also urged once again up 5% nationwide last month according to the Mortgage Bankers Association.
- Mortgage rates are firming up in response to the rising demand of mortgage money. They rose last week on average to 4.8% on a 30 year and 4.6 on the 15 year variety. Still, they are close to all time lows but with more people jumping into this home buying market, they could easily jump up over the 5% level in the coming weeks.
- According to the National Assocaiation of Home Builders NAHB, the affordibilty index also continues to hover near its all time best. According to NAHB, the median income american family earning $61,000 can now afford to buy a $290,000 home with a 20% down payment assuming only 25% on the gross income is devoted to the mortgage principle and interest, thanks to low financing rates.
- The median single family residence SFR now sells for about $175,000 and consumer psychology is turning upon housing, good for sellers!
The Gallup Polling Organizations asked a national sample of americans last month whether it is a good time to buy a house:
- Last month, 71% of americans polled said now is a good time to buy a house.
- 18% more than last year, and the highest level in four years
Moral of this post; only the doom sayers still believe housing isn’t turning around and heading for recovery!!
Fannie-Freddie Bailout – Solution to the Mortgage Crisis?
Filed under: Mortgage News | Tags: fannie mac, Fannie-Freddie Bailout, freddie mae, Mortgage Crisis causes
Comments(1) This past Sunday September 7th, the federal government took over the two most important and well-known finance companies in the nation. Freddie Mac and Fannie Mae have been official bailed out by the government in the wake of the crippling subprime mortgage crisis. The takeover is aimed at mitigating damages in this horrific mortgage dilemma.
Predictions as to the possible effects of the bailout are wide and varied. CNN reports that many small banks are being crushed, due to the fact that their stakes in Fannie and Freddie are now completely worthless. Most experts agree that taxpayers will be taking the brunt of the cost for this takeover. CNN also reports that Fannie and Freddie employees themselves are suffering immensely, also due to the fact that the companys’ stocks are now all but completely worthless.
The news is not all dire though. While most lenders will almost certainly be risk-averse to the point of paranoia for months and years to come, the government assistance may encourage some lenders to begin to open up their doors once again. Only time will tell…
Lending Practices More Tightly Regulated by the Federal Reserve
Filed under: Mortgage News | Tags: Lending Practices More Tightly Regulated by the Federal
Leave a Comment Today, the Federal Reserve took a stab at reducing the probability of another mortgage crisis like the one we are currently experiencing. The move is based on the fact that, while there were many potential causes of this situation, the major one seems to be deceptive lending practices.
The standards for subprime or “higher risk” lending is not much more strict. Lenders can no longer rely on borrowers simply stating their income, and prepayment penalties are outlawed except in certain situations. Other deceptive fees and penalties are no longer allowed either. These new regulations take affect in late 2009.
Mortgage Rescue Plan Approved by Senate
Filed under: Mortgage News | Tags: Mortgage Rescue Plan Approved by Senate
Leave a Comment Pursuant to this plan, the Federal Housing Administration would back mortgages designed to be more forgiving for those who are being crushed under the weight of their current housing payments. The bill would also allow banks to recover a certain amount of the money that they would have lost by dealing with so many expensive foreclosures. The plan will help almost an estimated half a million homeowners.
The plan is riddled with tax breaks and help for first-time home buyers. Both Democrats and Republicans banded together to pass this bill with an overwhelming 63-5 vote. However, the Bush administration has already promised to veto the bill, claiming that the plan helps lender more than it does borrowers. There are still too many disagreements among the parties, and Bush’s promise virtually assures that the bill will not be passed into law without certain revisions, despite the continuing struggle amongst homeowners.
Foreclosures: Profiting from Your Pain
Filed under: Mortgage News | Tags: profiting from your foreclosures
Leave a Comment I’m generally not one for a sensationalist piece, but this one is a bit interesting. Apparently this guy is scouring the country for foreclosed homes, waiting until the bank buys the home (nullifying any liens on the property), and swooping in to take them off the bank’s hands, who are usually all to happy to get rid of their new problem.
No doubt there are countless investors who are doing the same thing all across America. What’s interesting is how easily he is able to do it. He signed up for a $49 a month plan to access the MLS, does his own research and using his own line of credit. By using comparison data, he finds houses that are grossly under-priced due to foreclosure and scoops them up. No emotion, no attachment to any individual home, just pure numbers.
Granted, you have to have (1) be able to get credit and (2) have a lot of time on your hands to find the deals and do the research, but nonetheless it appears that not everyone is hurt by the current market.
As a side note, AOL seems to pitch this guy as an unfeeling opportunist who is profiting from other people’s pain, which is of course nonsense. The guy didn’t cause the foreclosure, nor did he help it along in any way whatsoever. He is just putting himself in the right place at the right time.
Another Unfortunate Consequence of the Mortgage Crisis
Filed under: Mortgage News | Tags: credit card limits decreasing, mortgage crisis
Leave a Comment In order to further reduce their risk, lenders are lowing credit card limits, reducing the number of allowable balance transfers, increasing interest rates, and generally limiting credit lines. They are doing so in response to more and more people relying on credit cards to pay their bills during our slow economic times. Some are saying this is a good thing; if borrowers have less credit available to them, they are less likely to overextend themselves.
Unfortunately, this is a load of crap. The damage has already been done, and lenders are doing nothing more than trying to save their own tails. The credit limitations are actually really hurting people. For example, let’s say you have a credit card with a $15,000 limit on it, and you have a $6,000 balance. If the credit card company lowers your limit so you won’t “overspend,” you will then have let’s say an $8,000 card with a $6,000 balance. This drastically increases your “credit utilization rate,” which is an important factor in determining your credit score. This in turn makes you less able to secure credit, and makes the credit you can get cost you more.
So, we continue the downward spiral of defaults leading to less credit, leading to more defaults, ad infinitum.
The Right Niches at the Right Time!
Filed under: Mortgage News | Tags: current lender niches, fico score
Comments(1) We’re still doing loans in declining markets, while other lenders have run scared!
- Super competitive I/O’s. Awesome fixed rates, and still offering Option ARMS/Hybrids.
- We qualify debt ratio on the Interest Only payment, not the fully amortized payment!
- LOAN AMOUNTS TO $ 3 MILLION!!!
- Only 1 appraisal required for loan amounts to $ 3 Million.
- Up to 45% DTI allowed on owner occupied properties 80% LTV and below with 680 FICO
- 2×30 Mortgage late’s allowed in the last 24 months, 0×30 in the last 12 months.
- 12 months bank statements as Full documentation for self employed borrowers.
- For Asset verification on Full Doc, we only require 2 Months bank statements to verify 2-4 months PITI, principle, tax and ins.
- Gift equity allowed for full doc purchases ( NO MONEY DOWN )
- Permanent Financing out of Construction loans considered a rate & term and not cash out!!!
- Full Doc on 1-4 Units Investment properties to 70%. No limit on amount of properties FINANCED by 1 investor.
- Borrowers can finance up to a total of 4 properties with Downey or up to $ 2 Million total in loans. ( ask for more details )
- No Seasoning required for R/T refinances, one day on title, one day out of purchase. WE TAKE CURRENT APPRAISED VALUE!!!
- Payoff of seasoned 2nd TD considered R/T(must be 12 months old, draws with the last 12 months okay)
- Non-occupying co-borrowers can help you qualify (blend ratios)
- Non-Applicant spouse income can help you qualify regardless of their FICO score
Shady Credit Card Companies Are Taking Advantage of the Information Age
Filed under: Mortgage News | Tags: information age, Shady Credit Card Companies
Leave a Comment The amount of information that companies can acquire about you with today’s technology is astonishing. Google probably knows as much about you as your own mother (perhaps more for those with less than tasteful Internet hobbies). Now it seems that certain unscrupulous credit card companies are monitoring your purchases and selectively penalizing you for purchases at certain venues.
Granted, the company in question, Compucredit, is known as a “subprime credit card” vendor who extend credit oportunties to slightly riskier propositions. Many of us have held a credit card such as one from this company during difficult financial periods in our own life. They are the ones who seem to invent a new fee each month, charge you to pay your bill, have astronomical interest rates and seem to know just when to insert a fee onto your bill so that your balance will be pushed over the limit (causing yet another fee).
Nevertheless, it seems as if CompuCredit has brought suspicious behavior at a credit card company to a whole new level. According to Business Week, the company is curtailing credit lines for people who use their Aspire Visa in certain places, especially tire repair shops, bars and massage parlors.
Of course, certain companies make financial decisions regarding your life based on your chosen activities often; you may not receive a (decent) life insurance policy if you choose Aviation as a hobby, for example. The difference here is that CompuCredit didn’t disclose that it uses certain criteria, and instead touts that it offers credit for anyone for any use.
The information age is an amazing place and an incredibly scary place, all at once. It is probably only a matter of time before certain Big Brother tactics are commonplace in our daily life. Scary thought.
Mortgage Applications Continue to Decline
Filed under: Mortgage News | Tags: mortgage applications continue to decline
Leave a Comment Gunshy lenders are as hesistant as ever to provide financing opportunities to borrowers. Mortgage applications have continued to decline, falling another 9% just in the last week. We seem to be in a bit of a downward sprial, credit tightening up as rates cotinue to increase, causing potential borrowers to hold off their purchases. Foreclosures continue to rise and the cycle continues.
Homeowners are still losing their homes at record rates, the highest in thirty years, as rates continue to rise for fifteen and thirty year fixed mortgages and one year adjustable rate mortgages.
We can expect the economic slump to continue as long as lenders stubbornly refuse to lower rates below the critical point which will kickstart our economy.
Mortgage Rates Still High After Subprime Mortgage Crisis
Filed under: Mortgage News | Tags: Mortgage Rates, subprime mortgage crisis
Leave a Comment Mortgage rates are stubbornly refusing to fall in the wake of the subprime mortgage crisis, despite countless state and federal initiatives intended to lower rates. The Federal Reserve has drastically reduced interest rates, and there are countless homes across America which are available for sale, many at foreclosure prices. Yet, lenders are still wary. The Chicago Tribune says that the hovering interest rates “defy conventional wisdom.”
The article claims that interest rates are still too high for newer home buyers, and even those looking to move into something a little more accommodating for their families. Because of their stubborn refusal to fall to normal recovery levels, high interest rates are exacerbating the economic stagnation, as the remaining lenders who didn’t succumb to the subprime mortgage crisis refuse to loan money.
All the big companies predicted that the credit crisis would long be over by now. Morgan Stanley and Goldman Sachs both used sport’s analogies to imply that we were witnessing the final stretch (if I may) of the disaster. Yet, here we are, still in post-crisis limbo. Time may be the only medicine for our economy’s gaping wounds, but don’t expect that to console America’s former homeowners.
If you are tired of hearing about the subprime mortgages crisis and would rather read something interested about the cause of the whole mess, read this scathing opinion.
AIG Investigated for Subprime Mortgage Fiasco
Filed under: Mortgage News | Tags: AIG federal investigation, AIG overstated subprime morgages
Leave a Comment AIG is being investigated for potentially skewing the value of certain swap portfolios which were backed by subprime mortgages. Attorney General Michael Mukasey claims that they misrepresented the worth of those contracts. AIG claims that the incorrect appraisal was simply due to the difficulties of valuing complex portfolios and because of the subprime mortgage crisis. Evidently, this is the most common defense to a charge of this nature.
Is the Subprime Mortgage Crisis Helping Third World Countries Develop?
Filed under: Mortgage News | Tags: mortgages in Africa, subprime mrotgage crisis
Leave a Comment Is the subprime mortgage crisis actually helping the economies of other less developed countries? According to this article, that may very well be the case. As we all know, the credit collapse in the Western World has brought our economy to a grinding halt, into what some might call a recession. As such, lenders who would be looking for business in the United States are looking to countries that would never have been a likely candidate in the past.
According to this article about the subprime mortgage lending crisis, the monetary losses that have and will result from the credit collapse are going to be astonishingly large. Countless Americans have been ousted from their properties, and this trend will no doubt continue for some time. The result has been that lending companies are looking elsewhere to create business.
Apparently, Africa is one such place that is benefiting from this trend. Although the African market is still a minuscule piece of the global pie, that chunk is rapidly growing. Ironically, lenders are running into some of the problems that we outlined on our page regarding how to improve your credit score. Many potential borrowers in Africa do not have a credit history, since they have been working on street corners or farms their entire life. “A tiny proportion of people have a bank account and an even tinier proportion have a product like a mortgage.”
The whole thing is a giant crap shoot. Given the complete dearth of information regarding African borrower’s credit histories, lenders have no idea about their potential to repay the loans. If they are too liberal and unrestrained in their lending, they may end up creating another subprime mortgage crisis in Africa, similar to the one we are currently experiencing in the United States.
The Subprime Mortgage and Loan Crisis
Filed under: Mortgage News | Tags: subprime loan crisis, subprime mortgage crisis
Comments(1) In this utterly confusing article, Keith Corbett commented on the subprime mortgage and loan crisis and the possibly causes. He attempts to separate the “myths” from the “facts,” claiming that most people erroneously believe that
-Irresponsible people caused the subprime mess
- Subprime loans increased home ownership
- People bought too much house
He claims that the realities are: (1) there are multiple reasons for the subprime mortgage crisis, (2) loan marketers were too aggressive and (3) the riskiest loans went to the most vulnerable borrowers.
The reason I say this article is confusing is because Mr. Corbett claims to dispel the “myths” with his “facts,” when really they are not mutually exclusive. In fact, they are entirely related. Let’s break down his logic, shall we?
(1) There are multiple reasons for the subprime loan crisis.
- Well, no kidding. In fact, if you look at the “myths,” there are a few of them. Hence, multiple reasons. What exactly did he disprove here?
(2) Loans were marketed too aggressively. Well, that is perhaps true. But loans will always be marketed aggressively when the market is favorable, because lenders make money from lending (all things being equal), and brokers make money from closing loans. The fact that lenders may have also been irresponsible does not mean that the borrowers were not also irresponsible, or that they did not buy too much house. Perhaps it is more accurate to say that the borrowers were ignorant rather than irresponsible, but such is life (read further down for action that California is taking against loan officers who are a little too aggressive).
(3) He says finally that the riskiest loans went to the most vulnerable borrowers. What exactly does that mean? In a financial sense, “vulnerable” can only mean borrowers who were in a shaky financial situation, with either bad credit or low income compared to the loan they took out. Thus, this correlates with both lenders and borrowers being irresponsible, borrowers buying too much house for their current income.
So really all these reasons are related, and no myths were dispelled whatsoever. As for the second “myth,” Corbett claims that subprime mortgages actually decrease homeownership, which would seem to be extremely counterintuitive, while offering no evidence. Perhaps he is correct, perhaps he isn’t; but making a blanket statement without any evidence is not very persuasive.
Regardless of the reasons, the subprime lending crisis is very real. Some claim it is just the result of normal market fluctuations, which may be partially true, although not entirely. The federal government and the various state governments have been scrambling to avert complete disaster for the last few months now.
In the latest attempt at homeowner relief from the subprime mortgage crisis, California seems to have taken the most aggressive action against unscrupulous lenders. The legislation promises to eliminate many of the bonuses which are given to mortgage brokers upon closing loans, in order to deter them from lending to those who might not be making the best financial decision (i.e. “risky borrowers”).
In fact, this legislation rails against many of the reasons we spoke about above as to why there was a subprime loan crisis in the first place. Loose underwriting standards and credit bureaus looking the other way with loans that should not have been given in the first place. It also brings up an important point, indicated that putting too much of the blame on borrowers, rather than aggressive lenders, is misplaced. Supporters of the legislation claim that even sophisticated borrowers are unable to understand all the terms and ramifications of a loan. Perhaps we need more information that is considered mandatory to disclose, such as with car dealerships, in order to avert another subprime mortgage crisis?
Unconventional Lending and the Subprime Loans Crisis
Filed under: Unconventional Mortgages | Tags: credit score, subprime lending, subprime loan, subprime loans, unconventional lending
Comments(2) I get asked on almost a daily basis what exactly unconventional lending means. Many people have never heard of an unconventional mortgage or an unconventional loan. Basically, most of these types of loans fall under the category of subprime loans.
Normally, loans are offered at the prevailing interest rate of the time when the borrower is approved for such a loan. However, for whatever reason many borrowers do not meet the credit score requirements for a certain loan amount at a certain interest rate. But that person may be very interested in obtaining a loan of that amount, whether it be for a new house or a new business venture. Unconventional lending offers them the potential ability to acquire such a loan amount at a higher then prime interest rate. This is known as a subprime loan.
Subprime loans are generally only available during strong economic periods. This is exactly what we witnessed a few years ago. Unfortunately, when the economy rapidly weakened, the subprime lending market dried up, and all the variable interest rates were jacked up. Most homeowners who took out a subprime loan are not able to refinance until their credit is a little stronger. As such, many people are now stuck with an interest rate which is spiraling out of control.
Subprime loans are the first type of financing to dry up when the market collapses. This makes perfect sense; when the economy is good, unemployment is down and people are being paid more, they are less likely to default on their debt. When the opposite is the case, people with lower credit scores become much riskier investments.
So, unconventional lending can be a very neat tool for getting someone into a home who is a slightly riskier investment for a lender. But when things go sour, the funding dries up and subprime loans can be very difficult to obtain.
