Mortgages

30-Year Fixed-Rate Mortgage Falls

July 8, 2010 By Sherry Tingley

Mortgage rates have fallen again to a near record low. You would think that people would be rushing out to refinance their mortgages and to some extent they have been. Applications for refinancing grew by 9.2 percent last week.

The dilemma is that people who would benefit by these lower rates are not the ones that are getting the new loans. With record unemployment rates, people have gotten into the situation where they now don’t qualify for these loans. Even if they have managed somehow to keep current on all payments due to lenders and credit card companies, their employment history knocks them out of the game.

If you have changed professions, which many people have been forced to do, you need a two year record of proven income to be considered for refinancing. Even with record-low mortgage rates, there just aren’t a lot of qualified borrowers.

In California, one homeowner has not made a mortgage payment for seven months and has not been subject to foreclosure yet. “We have 19 million vacant housing units in the United States, and I’m afraid it’s going to put some more of them on the market,” says Ted C. Jones, chief economist for Houston-based Stewart Title.

Financial analysts predict that mortgage rates will rise soon over the next week. Mostly because they feel it really can’t go much lower.

How to Qualify for a Home Loan

November 14, 2009 By Sherry Tingley

Owning a home has been considered a logical investment, as it gives a sense of security. It is asset than can be passed on to the next generation. With the recent turn in the economy, buying a home is becoming more enticing as property prices are going down. Although this is true, purchasing a home can still be expensive. Obtaining a home loan can help in being able to purchase property.

To apply for a home loan, banks normally check the applicant’s background, whether they have a good, steady job or some other stable source of income. Credit line is also checked, whether the applicant has been responsibly paying his/her debts well. An applicant must also have collateral as financial back up, as an assurance that the applicant will be paying back the loan in full.

Do some research on how much you can ask from lenders. This will give a general idea in figures of how much you can borrow, how much of your income is needed for the down payment as well as for the succeeding payments. Evaluate how much you can afford to spend for the house loan, in consideration with other existing monthly payments. It is recommended that less than a third of the applicant’s monthly income be spent on the payments for the loan and property.

Start saving money for the purchasing of the house before attempting to apply for a home loan. Possible ways of saving for the home loan and property purchase include taking a second job or reducing unnecessary expenses. This initial investment is a good demonstration to the lender of the applicant’s good intent in purchasing a house. There are also other options to be considered in obtaining financial support when purchasing a house such as the Veteran’s Administration loan for veterans. Consult with your real estate agent regarding other financial support options.

As a result of the recent development in the economy, banks are becoming more stringent in assessing applications. However, there are ways of improving chances when applying for a home loan. In order to prepare for qualifying for a home loan, it is recommended that the applicant obtain a copy of their credit report from a qualified agency. There are services which can send a report annually or directly contact the agencies for an immediate copy. Take note of outstanding or unpaid credit, as this is an important aspect that banks check for. Pay back all debts. If this is not completely possible, then make it as low as possible. This is important as it sends a note to the lender of the applicant’s reliability in paying back the loan.

Banks normally ask for collateral as an assurance that the applicant will pay back his/her loan. Other properties in real estate or investments in the stock market are possible sources of collateral.

There are no definite rules that can assure the applicant will obtain the home loan. Loans are approved on a case to case basis. However, following these tips increases the chances of getting the home loan. Do not despair if you are denied a home loan but see it as a sign that there may be areas in your application that need improving.

Mortgage Calculators

October 12, 2009 By Sherry Tingley

Many of us don’t have the talent to make complicated computations to figure out what your mortgage is actually going to cost you and what your monthly payments will be. A mortgage calculator is an automated tool to aid you in doing this before negotiating a mortgage transaction. This tool gives you an overview of your financial responsibility if you choose to get a mortgage on your real estate investment.

When you are shopping for a house you want to own or rent, you first want to think about all aspects regarding the house and the cost before making a decision. Using a mortgage calculator in the privacy of your home is more convenient than doing so in the presence of a mortgage lender.

If you are just starting to have a family and you are not yet earning much, renting is a good option for now. Furthermore, whether you are a first time buyer or an experienced buyer, a mortgage calculator is always the best thing to use for estimating the mortgage costs.

Your income, loans, debts, and available interest rates will determine how much you are allowed to borrow. Although most people know their monthly expenses, their idea of how to compute the monthly mortgage payment is another story. The mortgage calculator is the answer to know what you can afford by comparing the interest rates, loan terms, and down payment.

It estimates your monthly payments. It is a relief to have this type of calculator in determining the mortgage that is most beneficial to you from the different options available. The calculator is a handy tool to use before asking your lender for advice and making a new purchase. It will keep you on the right track. Take time with the numbers to see what you can afford and your financial situation can improve. Putting the information in a spreadsheet is another tool you can use that will help in discussions with the your lender.

Calculating mortgage payments is such a complicated task. Instead of acquiring the services of an agent to make you understand the figures, why not use a cost-free mortgage calculator which has been tested and proven to be authentic. Mortgage calculators are blessings to homeowners interested in real estate. Before these calculators, buyers had to use interest rate tables to compute the variables of the mortgage. It is common knowledge that complex mathematical computations are very hard to comprehend.

Bankrate.com has an online calculator that you can use for free. You will only have to type in all the information asked such as your monthly income and additional earnings, housing expenses, loans and insurances plus the amount to be converted. After this, the calculator will give you the amount and monthly payments that meet your requirements. It can also show you how many years you can shorten your mortgage payment time based on whatever additional payments you think you may be able to make. Using a mortgage payment calculator can be crucial to helping you make one of the most important buying decisions of your lifetime.

Why Our Housing Market Failed and Why a Bailout is Necessary

September 27, 2008 By Sherry Tingley

Why did the housing market FAIL? GREED, CORRUPTION and IGNORANCE!

In 2003, I was taking some Mortgage Banking courses to obtain my Mortgage Banking Certification. One of the courses was introducing, what they termed new instruments for financing mortgages. The new instruments were not available in the state of Texas at that time due to the state Homestead Laws.However, later that year they would become effective because the laws would be relaxed allowing homeowners to decide if they wanted the protection of the current laws or wanted to take advantage of one of the new financial mortgage instruments to get more house than current laws allowed them to have with their present income.

I was not new to the mortgage industry. I had been in the mortgage business for 20 years. I also recognized that these instruments were not new either. They were just redesigns of the products used by Savings and Loans during the 1980s for the most part.

I voiced an unpopular opinion at that time. I said to all who would listen, This is NOT good! There are to many greedy and uninformed people for this to work. We will see the S&L crisis happen all over again, only worse this time because of the increased practice of securitizing pools of mortgages and marketing them to investors as MBS (Mortgage Backed Securities) investment pools.

I watched as the parent company of the company I worked for went from buying and selling pools of loans in the $100,000 to $1,000,000 range to $1,000,000 to $1,000,000,000 range in a matter of 6 months to a year.

New residential construction sprang up on every vacant lot. Older homes were bought out, torn down and huge new houses took their place. Everyone who could identify a hammer from a nail was now home builder.

Older residences were selling on the market for 3, 4, 5 times the actual replacement cost, let alone the actual value. Everyone was trading up from the home the owned before to one 3 or 4 times bigger, newer and of course better. Greedy lenders convinced greedy and gullible buyers that by the time the ARM (Adjustable Rate Mortgage) they were purchasing to buy the house actually went up, their salary would have increased to equal the adjustment. Anyone and everyone could own a home now. It didn’t matter that the end payment was many times more that their income warranted they would be able to sell or refinance when the time came to pay more.

Why should we pay to bail out the housing market? WHY BAIL OUT GREED, CORRUPTION and IGNORANCE? I don’t know, no one has convinced me yet.

But, I don’t want to see the Economy collapse.

I personally do NOT believe in bailing out companies or homeowners because they made a bad judgment call, and certainly not greedy or uninformed people. I saw too much to even pretend that I imagine that the majority of those involved don’t deserve exactly what has happened, including the investors.

However, (and this need a lot more research, as to bail out terms and conditions) we are dealing with a different age and economic mix than prevailed in the 1980s. Many of our investors are foreign entities. The soundness of our dollar on the worldwide marketplace and our economic standing in the world depend on our ability to stabilize the market and regain the trust of the entire world. We have no choice but to underwrite the investments that are held by so many foreign investors.

This being acknowledged, a very strict oversight committee must oversee this bail out. Not by backbiting, corrupt politicians, but an honest, trustworthy, independent committee. Our main problem here, of course, is finding honest, trustworthy, independent and (let me add) incorruptible people that are experts in the mortgage industry.

This article was written by Virginia Ritchie.