Monday, February 13, 2012
The New York Times
When borrowers choose a fixed-rate loan for a home purchase or refinancing, only one part of the monthly mortgage statement is ever likely to change: The escrow amount.
Read the full story:
http://www.nytimes.com/2012/02/05/realestate/mortgages-shrinking-the-escrow.html?_r=1&ref=realestate
Thursday, February 9, 2012
In the fourth quarter of 2011, 85 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table, a 26-year high, according to Freddie Mac. Of these borrowers, 37 percent maintained about the same loan amount, and 49 percent of refinancing homeowners reduced their principal balance; this latter percentage reflecting “cash-in” borrowers was the highest in the 26-year history of the analysis.
“Cash-out” borrowers, those that increased their loan balance by at least five percent, represented 15 percent of all refinance loans, the lowest percentage in the 26 years of analysis; the average cash-out share during the 1985 to 2010 period was 46 percent.
The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.4 percentage points, or a savings of about 26 percent in interest rate.
Monday, January 23, 2012
The Mercury News
Mortgage interest rates, near all-time lows, are likely to remain attractive throughout 2012. That means opportunities for new home buyers and for homeowners who want to refinance.
Read the full story:
http://www.mercurynews.com/real-estate/ci_19683720
Monday, November 14, 2011
Consumers currently home shopping or planning to refinance, need to decide on a specific mortgage program and do research to decide which will be the best fit for their situation.
Read the full story
http://www.mercurynews.com/real-estate/ci_19249844
Wednesday, November 9, 2011
In the third quarter of 2011, 82 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table, according to a report by Freddie Mac. Of these borrowers, 44 percent maintained about the same loan amount, and 37 percent of refinancing homeowners reduced their principal balance.”Cash-out” borrowers, those who increased their loan balance by at least five percent, represented 18 percent of all refinance loans; the average cash-out share during the 1985-to- 2010 period was 46 percent.More info
Monday, January 17, 2011
Homeowners looking to lower their monthly mortgage payments and reduce their interest rate may be able to do so without refinancing. A little-known strategy called recasting or re-amortization is available through some mortgage lenders and servicers, and eliminates the hefty fees and daunting credit requirements of refinancing.
MAKING SENSE OF THE STORY FOR CONSUMERS
Monday, October 11, 2010
Some homeowners who already have refinanced into low-interest-rate mortgages are using a little-known strategy to make their monthly payments even smaller. Called “recasting” or “re-amortizing,” the strategy allows a borrower to lower the monthly payment on an existing fixed-rate home loan for a small fee without having to apply for a new loan and without having to pay reappraisal and other fees.
Read the full story.
Tuesday, August 24, 2010
The federal agency charged with maintaining stability and public confidence in the nation’s financial system can help you feel stable and confident about your home loan — at the lowest possible cost.
“FDIC Consumer News Special Edition: 51 Ways to Save Hundreds on Loans and Credit Cards” suggests consumers consider mortgages, credit cards and other loans as not just financial services, but tangible products requiring before-you-buy scrutiny and careful use after you sign on the dotted line.
The FDIC’s timely treatise offers advice on financial services from auto loans and credit cards to fraud and small business loans, and there’s a heavy dose of advice on mortgages.
The information comes in the midst of a mortgage market meltdown that makes home loans tougher to land and more expensive own.
Here’s how to cut costs in a number of areas.
“Most of the time people don’t read documents and don’t get the idea that these indexes could really go up. How could you anticipate they would double so quickly?” said Warren Winsness, president of the Santa Clara County Association of Realtors in San Jose, CA.
Janet Kincaid, FDIC’s senior consumer affairs officer, agrees.
“If you are thinking about an ARM, make sure you know how much and how often the interest rate and payment could go up before you sign on, and be comfortable that you can meet those higher monthly payments. Don’t let a low teaser rate lure you in; you may be surprised later,” she said.
“This is an easy way to pay off the loan and save thousands of dollars in interest charges without incurring the cost of refinancing,” said Marshall.
Consult with a financial or tax advisor to learn the pros and cons of each approach.
Thursday, August 12, 2010
The Federal Housing Administration (FHA) last week provided details on its “FHA Short Refinance” program that will enable lenders to provide additional refinancing options to underwater homeowners. Beginning Sept. 7, the FHA is offering eligible underwater non-FHA borrowers the opportunity to qualify for a new FHA-insured mortgage.
Participation in FHA’s refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score greater than or equal to 500. The property must be the homeowner’s primary residence and the borrower’s existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance, bringing that borrower’s combined loan-to-value ratio to no greater than 115 percent.
Additionally, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.
Tuesday, August 10, 2010
Published by James Dwiggins under General.
(MCT)—David Kosowski has a full-time job, a sky-high credit score, a solid debt-to-income ratio and enough cash stashed away to put a 20% down payment on the three-bedroom, two-bath home he’s had his eye on since spring.
But when he applied for a mortgage to cover 80% of the $495,000 purchase price of the Coral Gables, Fla., home last month, he was flatly denied.
His story is one that has played out with head-scratching regularity across the troubled housing market, industry analysts say, even as mortgage rates have dropped to historically low levels.
The average interest rate for a 30-year fixed-rate mortgage sank to a record-low 4.56% this week, according to government-sponsored mortgage buyer Freddie Mac. Fixed-rate 15-year mortgages dipped slightly to an average 4.03%, also a record.
But even as rates fall, lenders are raising the bar ever higher for applicants, making it harder for even financially-stable home buyers to qualify, and in some cases making homes affordable only to those able to pay with cash.
Kosowski, who seems to have weathered the recession and the housing market downturn better than many—he’s employed and has considerable equity in the three-bedroom home he purchased 10 years ago—said his application was rejected because the company he works for (and owns a 25% stake in) saw its earnings drop between 2008 and 2009.
That was enough, he said, for the bank to turn down his loan application—despite his 817 credit score, a history of meeting all debt obligations and a 21% debt-to-income ratio.
“They asked me to explain the earnings decline,” he said. “I wrote a letter explaining that the economy had been down in 2009, and the next day they said the loan was denied. I was very surprised.”
Steve Schneider, his mortgage broker, and owner of Greenwich Title Services in South Miami, said he was surprised as well. “His credit is as good as anyone I’ve ever worked with,” he said. “He should’ve flown through.”
Such rejections would have been unheard of a half-decade ago, when credit was flowing freely, often to people who couldn’t afford the homes and condos they were buying, said Doug Dewitt, a Miami-based real estate broker.
“Now the pendulum has swung completely in the other direction, and lenders are making you very accountable in terms of your credit history,” he said. “It’s like they don’t want to write one more bad loan.”
With South Florida’s housing market still struggling to recover from record-high foreclosures, toppled home values and a glut of inventory, the ease with which banks now turn down applicants is nearly unprecedented, he added.
Potential borrowers are being denied access to tantalizingly low interest rates for reasons ranging from insufficient down payments, to a less-than-perfect credit history, to concerns about the property or buildings they hope to buy into.
The current interest rates are so desirable because they translate into significant savings in monthly and total payments for home buyers. For example, someone getting a $250,000 home loan in July 2010 would save an average of about $155 each month, compared to someone getting a similar loan last July, when the average 30-year fixed interest rate was about a percentage point higher.
Mortgage lending in 2010—down about 50% from early 2009—has shown a complete 180-degree turn from the home lending practices that reigned before the housing market bubble burst, and represents yet another obstacle stalling a recovery in the housing market, those who track the industry say.
Kosowski had very little trouble getting a loan for the home he bought back in 2000, when his income was lower than it is today. As he looked to move into a bigger home this year, the stack of paperwork he had to fill was considerably thicker than it was 10 years ago.
“It’s night and day,” he said, comparing the two loan application experiences. “I had to give about a quarter of the information that they ask for now, my income was significantly less than it is now, and there was no problem getting a loan. It’s almost like they don’t want to lend.”
The low-interest rates have done little to spur activity in the housing market. Last week, the number of mortgage-loan applications for home purchases dropped to its lowest level since the 90s, the Mortgage Bankers Association found. Nearly four out of five applications were from existing homeowners looking to refinance, many of them rejected because of insufficient or nonexistent equity.
Despite prices that have fallen drastically in the past five years, traditional home sales to traditional, middle-income buyers have been pushed to the margins.
With the expiration of the federal home buyer tax credit and many still worried about losing their jobs, the stiff lending requirements of banks offer up yet another reason for the average person to not buy a home.
Kosowski, who works for a lighting manufacturing company, ended up paying cash for the Coral Gables home in June, and is hoping to get a refinance loan soon.
Greg McBride, senior financial analyst for Bankrate.com, predicted that mortgage rates would remain low for the foreseeable future, but it will take more than low-rates to spur a recovery.
“Low mortgage rates alone are not going to revive the housing market,” he said. “People are still nervous about their jobs, and reluctant to take the plunge into home ownership. And the market continues to be plagued by a very high level of distressed properties.”
