Get clear mortgage info

Get clear mortgage info


Whether you're looking to buy your first home, or you already have a mortgage and want to move or review your options, our impartial, practical information and tools can help.

No selling. No jargon. Just the facts.
Take stock

* Use our Mortgage calculator to find out what your monthly repayments might be and to see the effect of any change in interest rates.
* Use our Budget calculator to help you take stock of your finances.
* Find out what the other costs of your mortgage might be – see Fees and costs.
* Our Mortgages section will help you work out How much you can afford.
* Check your credit history – see Credit reference agencies.

Check out your options

* Use our impartial comparison tables to help you compare mortgages from different lenders – see Compare mortgages.
* Don't forget to:
o compare the different fees and costs of getting the mortgage as well as the repayments;
o check out the various features and options, such as repayment holidays and overpayments; and
o consider the exit costs of the mortgage.
* In some cases, mortgage payment protection insurance (PPI) might be a condition of your loan but you don't have to buy it from your lender so shop around for the best deal for you – see Compare PPI.

If you already have a mortgage, talk to your lender about what they can offer you.
Worried?

* Use our Stay in control of your mortgage checklist for three simple steps to help you manage your mortgage in tougher times.
* If you're getting into difficulties get free, confidential debt help – see Organisations that can help.
* Our free What to do when you can't pay your mortgage printed guide could help – see Related information.

Rates are falling. Time to refi?

This week's abrupt drop in mortgage rates will provide an opportunity for some borrowers to refinance. But a large-scale refinancing boom is unlikely.# A good candidate for a refinance is a homeowner who: has good credit;
# owns a house that is worth substantially more than the outstanding debt on it;
# earns enough to repay the loan and can prove it;
# isn't overburdened by student, auto and credit card debt;
# has enough cash to pay the closing costs.

In other words, today's refinancer looks more like a typical mortgage borrower in the 1990s than a typical borrower during the go-go period of roughly 2001 to 2006, when the primary qualification to get a home loan was the ability to fog a mirror. Lending standards are more strict now, and the tighter guidelines will prevent a lot of people from refinancing, even if they want to. "The issue to actually pulling the trigger and getting the mortgage done is less a matter of rates and more of qualification," says Cameron Findlay, chief economist for LendingTree.com.

A lot of today's would-be refinancers will find that they don't meet the qualifications. When homeowners got mortgages two years to five years ago, many of them:

* got away with exaggerating their incomes;
* had terrible credit histories;
* made no down payments or tiny down payments;
* overpaid for their houses.

Now they can't refinance because they don't really earn enough to qualify for a loan, or they owe more than the house is worth, or they still have low credit scores.

"We are seeing a big spike in loan calls," says Jeff Lazerson, president of MortgageGrader.com, an online lender. "Some formerly prime borrowers are now having credit score struggles. And the other big issue is lack of equity. So far, of every 10 potential borrowers we talk with, there are three that we can actually assist."

There's an old saying that if you have money and don't need a loan, the bank is willing to lend to you, and if you don't have money and need a loan, the bank will turn you away. A parallel situation exists in today's refinance market. Of the people who can qualify for a refinance, most of them probably don't need to.

Who can refinance
# Today, there are two groups of qualified borrowers who should look at refinancing: those who have fixed-rate mortgages above 6 percent;
# those who have adjustable-rate mortgages and want to flee to the security of a fixed-rate loan.

Most of the people in this group have hybrid ARMs with low introductory interest rates. If they refinance into fixed-rate loans at, say, 5.75 percent, their interest rates and monthly payments will go up. But with fixed-rate loans, they don't have to worry about future rate increases, whereas with adjustable-rate mortgages, the threat of future rate increases is always present.

In today's economic climate, people want the secure feeling of having a stable mortgage payment that comes with a fixed-rate loan, Lazerson says.

"The great news is that refinance clients are receiving significant emotional relief," he says, "getting out from under adjustable loans and high-rate seconds as well as lower interest rates and payments."

Mortgage Articles and Advice

* How Much House Can You Afford?
*
o Debt-to-income Ratios
o Your Monthly Income - the way Lenders Figure it
o Your Maximum Monthly Mortgage Payment
o The Rest is Easy - Sort of
* Your Down Payment Affects Everything Else
*
o AnalyzingYour Savings - the First Step
o Mortgage Program Choices
o Shopping for Interest Rates
o Writing Your Offer
o Conclusion - Look at Your Savings First
* Documenting Your Assets & Verifying Your Down Payment
*
o You can't just "come up" with the money
o Checking, Savings, & Money Market Accounts
o Stocks, Bonds, Mutual Funds, etc.
o Gifts from Family Member
o 401K or Retirement Accounts
o Selling Personal Property
o Help from Employers
o Savings Bonds
o Borrowing to Come up with a Down Payment
* Where Does Mortgage Money Come From?
*
o The Olden Days
o How it works now
o Mortgage Backed Securities
* Understanding Commercial Lending
*
o What to Expect when Applying for a Commercial Mortgage Loan : Part 1 (new!)
o What to Expect when Applying for a Commercial Mortgage Loan : Part 2 (new!)
o What to Expect when Applying for a Commercial Mortgage Loan : Part 3 (new!)
* Different Types of Lenders
*
o Mortgage Bankers
o MortgageBrokers
o Wholesale Lenders
o Portfolio Lenders
o Direct Lenders
o Correspondents
o Banks
o Savings & Loans
o Credit Unions
* Advantages of Different Types of Lenders
*
o What kind of Lender is Best?
o Portfolio Lenders
o Banks and Savings & Loans
o Mortgage Bankers
o Mortgage Brokers
o Wholesale Lenders
* When Realtors or Builders Recommend a Lender
* Things You Need When You Apply for a Home Loan
*
o "Alternate" Documention versus Full Traditional Documentation
o The Actual List of things you need to get a quick loan approval
* Closing Costs When Buying or Refinancing a Home
*
o Introduction
o Lender Associated Costs - the "normal" ones
o Lender Associated Costs - the "other" ones
o Items Paid in Advance
o Impounds or Reserves
o Costs not Associated with the Lender
o Refinancing Associated Costs
o Asking the Seller to Pay Closing Costs - Advice and Rules
* Mortgage Interest Rates - How it Works
*
o A Loan Officer's Rate Sheet
o Pricing the Loan
o Quoting Rates to You
o Locking in Your Rate
o Shopping for Rates
o Getting Reliable Quotes

The Basics 5 tips to make cheap mortgages pay

With rates at their lowest levels in 36 years, the challenge is not just finding the best rate but finding the best terms. Here's what you need to do.
By Charley Blaine

Even as mortgage rates drop to their lowest level in 36 years, it still pays to shop carefully.

National surveys put the average fixed, 30-year rate at 6.22% last week, but many lenders are offering lower rates than that, with nominal rates dropping below 6%. (To get more information on mortgage rates, click here.)

But the nominal rate isn't the end of the rate question.

The total cost of the loan -- the annual percentage rate (APR) -- will be higher depending on how much you pay in origination fees and other costs to get the loan. Calculating an APR is tricky, but the rough rule of thumb is that costs equal to 1% of the loan amount add 0.25% to the stated loan rate. So, if your stated rate is, say, 6.45% and your lender charges you a 1% origination fee, your APR would be about 6.7%.

A $150,000 30-year fixed-rate loan with a nominal rate of 8.5% in May 2000 (and an APR closer to 8.8%) may now cost you as little as 6.2% with the APR at just under 6.5%. This knocks the principal and interest payment down from $1,153 to $919, a drop of $235 a month.

Rates for 15-year fixed-rate loans, a popular option for refinancing, fell last week to 5.62%, according to a Bankrate.com survey of lenders. Rates for 1-year adjustable-rate mortgages slipped to 4.57%.

A year ago, 30-year fixed-rate mortgages were at 6.92%, according to lender Freddie Mac. The last time rates were as low as they today was in 1966.

Make sure refinancing is right for you
Homeowners flooded lenders in 2001 with applications to refinance mortgages at the lower rates; refinancings accounted for up to 75% of all loan business. Total loan volume hit a record in 2001, the Mortgage Bankers Association of America says. The association, which predicted in March home loans would fall 25 percent this year, now expects the current surge will boost mortgages to about last year's record of nearly $2.3 trillion..

The question now is how to get the best deal. Here are some tips.

Do some serious shopping and pay attention to costs and the APR. The best mortgage deal balances the rate against the costs. So this is where you want to pay attention to the APR. The lender would prefer, actually, that you keep paying at the higher rate, but it will cost more to replace your business. So, the lender may be prepared to offer less of a rate cut in exchange for lower costs. It's one thing to get a 6.1% loan. But the lender may charge an origination fee equal to 2% of the loan and related costs (title search, recording fees and the like), boosting your APR to 6.6%. If you're borrowing $150,000, that's $3,000 in additional costs, paid now. At 6.4%, it might not cost you anything except the filing fees. When you do your shopping, find terms that are acceptable to you and see if the lender will match them.

Make sure you know how long the lender will guarantee the rate. Lenders will typically lock in loan rates for 30 days, sometimes 60 days. (Some who are swamped with applications may go further than that.) What you want, as our colleague Sharon Epperson at CNBC-TV notes, is a "float down" option. That means that if you commit to take a loan at 6.4% and rates fall to 6%, you can get the lower rate. Some lenders will throw that in as an incentive to do business with them. Some won't. Ask now and remember mortgage lenders are required to give you a truth-in-lending statement three days after you apply for the loan. The statement sets out the amount, nominal rate, APR, term, fees and projected closing costs.

Play hardball if rates fall after you've locked in. Yes, it's stressful, but if rates drop a lot from when you started the process, call the lender. Make him deal -- even if you've put up money to start the mortgage process. The thousands you will save over the life of the loan will easily offset giving up a few hundred dollars.

Calculate how long it will take to earn back the costs of refinancing, if any. On the $150,000 loan, let's say your rate is dropping two percentage points or so and saving you $230 a month. But the costs are 2% of the loan amount. It will take just under 13 months to recover the costs of the new loan from the lower monthly payment. If your loan rate is dropping just a percentage point, it may take closer to three years to recover the costs. If that's the calculation you get, ask yourself if it's worth the cost. A lot of consumer finance experts say it may not be. It depends on how long you plan to live in the house. If you plan to live in the house for, say, 35 years, maybe it's a good deal. If you expect to move within two years, it's probably not. (For the record, families tend to move about once every seven years -- more often when they're young and less often as they age.)

Don't forget the taxes. Many mortgage borrowers forget that if they cut their interest costs by $2,000 a year, the interest saved becomes taxable income. So, make sure you're planning for the effect of the refinancing on your tax bill.

Mortgage rates fall, if you can get a loan

Average is now 5.76 percent, but brokers say securing refinancing difficultNEW YORK - Mortgage rates fell for the second day in a row Wednesday, and could be heading toward levels home buyers and owners haven’t seen this year.

That drop is what the Federal Reserve was aiming for when it announced a plan Tuesday to buy $600 billion in mortgage-related securities in an effort to slow falling home prices and rising foreclosures, while kick starting demand among fearful homebuyers.

The average interest rate on a 30-year fixed-rate mortgage Wednesday was 5.76 percent, the lowest it has been since February, according to HSH Associates, which publishes mortgage information. The lowest daily figure this year was 5.47 percent on Jan. 23.

Mortgage brokers fielded a steady stream of calls Wednesday from borrowers looking to refinance. But some of those callers were confronted with an unwelcome truth: only those with good credit histories and equity in their properties need apply. And with the damage wrought by the real estate downturn, now in its third year, that number has declined dramatically.

Lower rates won’t mean much for the more than 4 million homeowners who are already behind on their mortgage payments, or the 12 million homeowners who owe more money to the bank than their homes are now worth.

“This will help the non-troubled borrower, the standard consumer who is making payments on time,” said Mike Larson, real estate analyst with Weiss Research. “For the troubled borrower, you really have to look at some other avenues,” including modifying their existing mortgage with their current lender.

Rates react to supply, demand and risk associated with certain securities. Mortgage rates have hovered stubbornly around 6 percent for months.

With this week’s announcement to buy $600 billion in mortgage-related securities, the Fed became the 800-pound gorilla in the market. The Fed’s demand for securities will drive prices higher, and yields and (with luck) interest rates lower.

“If these rates hold, you’ll see these refinance applications really start to take off next week,” said Marc Savitt, president of the National Association of Mortgage Brokers.

Already, some homeowners were lining up on Wednesday.

Brenda Pittsnogle and her husband are combining their first and second mortgages, with rates of 5.875 and 6.5, in a refinancing deal at 5.375 percent. That will save the couple $170 a month.

They had been waiting for the past six or seven months for interest rates to fall this low.

“We’re elated,” said Pittsnogle, of Kearneysville, W.Va. “We really never thought that it would go down as far as it has.”

Meanwhile, homebuyers who have been waiting patiently at the starting line may be enticed to take the Fed’s action as a starter’s gun. Lower rates and falling prices make the market more attractive for qualified buyers.

Compared to the 6.75 percent interest rate homebuyers paid on Oct. 15, at Wednesday’s rate borrowers would save $106 a month if they bought the U.S. median priced home of $183,300 with a 10 percent down payment.

“It really gives a confidence boost to people shopping for homes and everybody thinking, ‘Wow mortgage rates are so low, I should think about doing something,”’ Guy Cecala, publisher of Inside Mortgage Finance, who expects rates to drop as low as nearly 5 percent by the end of the year.

While troubled borrowers generally won’t benefit from the Fed’s move in terms of refinancing, it can help them in other ways. For example, the lower rates could make lenders more willing to modify mortgages of distressed borrowers, experts said.

“There are programs in place for you if you are having troubles,” said Keith Gumbinger, vice president of HSH Associates. “(The Federal Reserve’s plan) is aimed at the vast majority of American homeowners who have done nothing wrong but have been affected by what’s happening in the housing market.”

Homeowners who may be most interested in refinancing include those who have adjustable-rate mortgages that have reset to higher rates or will in the coming months.

“Refinancing waves are a great cleansing process for the mortgage market,” Cecala said. “It brings in new home buyers or borrowers as well as lowering the payments of existing buyers. It makes the mortgage market look much healthier.”

Get clear mortgage info

Whether you're looking to buy your first home, or you already have a mortgage and want to move or review your options, our impartial, practical information and tools can help.

No selling. No jargon. Just the facts.
Take stock

* Use our Mortgage calculator to find out what your monthly repayments might be and to see the effect of any change in interest rates.
* Use our Budget calculator to help you take stock of your finances.
* Find out what the other costs of your mortgage might be – see Fees and costs.
* Our Mortgages section will help you work out How much you can afford.
* Check your credit history – see Credit reference agencies.

Check out your options

* Use our impartial comparison tables to help you compare mortgages from different lenders – see Compare mortgages.
* Don't forget to:
o compare the different fees and costs of getting the mortgage as well as the repayments;
o check out the various features and options, such as repayment holidays and overpayments; and
o consider the exit costs of the mortgage.
* In some cases, mortgage payment protection insurance (PPI) might be a condition of your loan but you don't have to buy it from your lender so shop around for the best deal for you – see Compare PPI.

If you already have a mortgage, talk to your lender about what they can offer you.
Worried?

* Use our Stay in control of your mortgage checklist for three simple steps to help you manage your mortgage in tougher times.
* If you're getting into difficulties get free, confidential debt help – see Organisations that can help.
* Our free What to do when you can't pay your mortgage printed guide could help – see Related information.

Your request is being processed... The Rise Of The Financial Machines

BEWARE of geeks bearing formulas." So saith Warren Buffett, the Wizard of Omaha. Words to bear in mind as we bail out banks and buy up mortgages and tweak interest rates and nothing, nothing seems to make any difference on Wall Street or Main Street. Years ago, Mr. Buffett called derivatives "weapons of financial mass destruction" -- an apt metaphor considering that the Manhattan Project's math and physics geeks bearing formulas brought us the original weapon of mass destruction, at Trinity in New Mexico on July 16, 1945.

In a 1981 documentary called "The Day After Trinity," Freeman Dyson, a reigning gray eminence of math and theoretical physics, as well as an ardent proponent of nuclear disarmament, described the seductive power that brought us the ability to create atomic energy out of nothing.

http://www.huffingtonpost.com/2008/10/12/the-rise-of-the-financial_n_133943.html