Mortgage Tips, News And Deals

Will FHA Loans Become The Dominant Loan Products???

noreply@blogger.com (MortgageDoctor) — Sat, 05 Apr 2008 06:19:00 +0000

As American economy is starting to reach the bottom this is automatically effecting all industries. Gas is expensive as hell so people in the transportation industry who don't have a union and didn't get raises are very pissed off. The Real Estate Market has reached, pretty much all time lows and Foreclosure rates are just (negatively) amazing. This is obviously pissing off people in the Real Estate industry and people who are trying to sell a home!!! Many people lost jobs and many are being forced into different industries. People are not spending money, because they don't have any!!! So, as the American government has allowed for America to hit (pretty much) the ground and on top of that allowing for the Euro to be kicking the Dollar's ass, one good thing that the government still offers to its citizens and residents is the FHA loan.

FHA loan is a government backed loan to the banks (lenders) allowing them to charge a smaller interest rate and FHA guidelines are a lot looser than conventional (conforming) loans. FHA is not really Credit Score driven and is more oriented towards the borrower's credit history. The most important factor for the borrower is not having more than 2x30 day late payment on their credit accounts. The beauty of FHA is that even if you have a poor credit score and good credit history you can still get a prime rate.

The Main difference between FHA loans and Conventional loans is the following.

FHA loans require an upfront 1.5% of the loan amount to be paid at closing. Conventional loans don't require this.
FHA charges the borrower .5% of the loan amount every year. If the borrower's LTV (loan to value) or CLTV (combined loan to value) is less than 80% the borrower does not pay a premium with a conventional loan.
With a conventional loan you need at least 5% down payment. FHA only requires 3% down payment.
Most FHA loan are assumable. Assumable means that when you sell your home the buyer can take over the payment on the existing loan. This is excellent if you want to later on give the house to your kids. Most conventional loans are not assumable.

Scenario (600 credit score, good credit history[no more than 2x30 late payments):

Sales price 200,000

FHA Loan (30yr Fix)

3% Down (6000) New Loan Amount: 194,000
6% Interest Rate (Monthly payment 1163.13 +(.5%premium/12) 80 = 1243.13 + tax and insurance
Closing cost should not be more than 4000 + (down payment) 6000 = total money at closing table = 10,000

Conventional Loan (30yr fix)

5% Down (10,000) New Loan Amount 190,000
7.75% (very realistic even too good for 600 credit score) (Monthly payment 1389.84 + (pmi) 80 = 1469.84 + tax and insurance.
Once the borrower has more than 20% equity in home or when they owe less than 80% of loan amount no pmi (private mortgage insurance) new payment 1389.84 + tax and insurance.
Closing cost should be no more than 3000 + 10,000 down payment = 13,000 at closing table.

So don't think that you know everything and once in a while listen to your mortgage broker. Believe it or not there not that many bad ones out there as all are either in jail or lost their licences. Thank you for reading.

Now Is Really The Time To Buy...

noreply@blogger.com (MortgageDoctor) — Fri, 15 Feb 2008 10:36:00 +0000

As mortgage interest rates are very low lately and due to the slow Real Estate market now is the perfect time to buy a home for personal use or for an investment. Analysts believe that as desperate home sellers keep on selling their homes at below value will not permanently lower house values. Instead, it is projected that by early 2009 house values will climb back where they left off in 2007. So if you have money, which not that many people do at the moment now is an excellent time for a home investment, yay!!!

Mortgage Reset May Boost Foreclosures: Study

noreply@blogger.com (MortgageDoctor) — Mon, 19 Mar 2007 22:19:00 +0000

By Ilaina Jonas

NEW YORK (Reuters) - About 1.1 million additional home foreclosures are expected over the next six years as adjustable-rate mortgages -- which made home buying more affordable to U.S. buyers in recent years -- reset to higher payments, according to a study by research firm First American CoreLogic.

The expected $112 billion in losses won't break the mortgage industry but will inflict pain on lenders and borrowers affected by the defaults, said the study, released on Monday.

more at: http://today.reuters.com/news/articlenews.aspx?storyID=2007-03-19T051716Z_01_N19243239_RTRUKOC_0_US-USASUBRIME-RESET.xml&rpc=81

Adjustable Mortgages:

noreply@blogger.com (MortgageDoctor) — Fri, 16 Mar 2007 18:51:00 +0000

Why do people take out ARM loans anyway? An ARM is an Adjustable Rate Mortgage and these can suit many people perfectly. The idea is that you have a term where your interest rate is fixed. This term can be as short as one month and as high as ten years. ARM loans are ideal for starter homes or condos, where you plan only to stay for 3-10 years and then you plan to sell. They can also be great for getting into the home of your dreams with a slightly lower payment. The risk is that when you refinance your mortgage, the interest rates may be higher, so although you are getting a great deal in the short term, your long term interests are not as clear. If you are in the financial industry and you follow interest rates, an adjustable mortgage is probably a great plan. The key is knowing when to refinance into a fixed rate mortgage to protect your long term property interests.

Choosing a Mortgage Term:

noreply@blogger.com (MortgageDoctor) — Fri, 16 Mar 2007 18:49:00 +0000

The term of your mortgage is an important factor to consider when choosing your mortgage program. Obviously, the longer the term, the lower the payments - but low payments aren't on every person's mind. In fact, some people prefer to make larger payments towards their home loan because it will be paid off more quickly and because they are putting their money into an appreciating asset. Additionally, if you plan to rent or lease your property or a unit in your property, you'll make more money the faster you pay down your mortgage. The moral of the story is that larger payments are better as long as you can afford them. This doesn't mean you can't get a 30 year fixed mortgage and just be disciplined enough to make an extra payment or two throughout the year, but it does mean that the more money you put into your home, the better off you'll be.

Quick Explanation About Interest Rates:

noreply@blogger.com (MortgageDoctor) — Thu, 15 Mar 2007 04:12:00 +0000

To be qualifies for a certain interest rate many factors are included and analyzed (income, credit score, amount of equity in your home, DTI {debt to income}, the current market, etc, etc.) However, one factor that has a total relation to interest rates is the 10Yr Bond. When ever the 10Yr bond goes up the interest rates go down, when the 10yr bond goes down interest rates go up.

Countrywide Cuts 108 Wholesale B&C Jobs

noreply@blogger.com (MortgageDoctor) — Tue, 13 Mar 2007 22:03:00 +0000

Countrywide Financial Corp., the nation's eighth largest subprime table-funder, has cut 108 jobs in its wholesale subprime division, citing a need to align the lender's "workforce with the recent changes in the mortgage market." The company declined to comment further and would not disclose how many of the jobs eliminated belong to account executives. Last week the Calabasas-based Countrywide disclosed that 19% of its $119 billion subprime servicing portfolio was in some stage of delinquency. According to the Quarterly Data Report, CFC ranks first among all subprime servicers, and third among lenders.

New Trend In The Mortgage Industry:

noreply@blogger.com (MortgageDoctor) — Mon, 12 Mar 2007 21:10:00 +0000

More and more, the mortgage industry is becoming more and more technologically advance. More and more mortgage companies are introducing e-sign technologies. This feature will mostly appeal to busy professionals who don't have much time to meet with their mortgage consultant when obtaining a mortgage.

E-sign is a unique concept where all the mortgage documents can be signed on the internet and be sent back to the mortgage company. This way everyone benefits as the loan can be closed faster and the consumer never has to leave their home until closing.

Google e-sign for more information...

Mortgage Tips For Consumers:

noreply@blogger.com (MortgageDoctor) — Sat, 10 Mar 2007 16:47:00 +0000

As a mortgage professional I feel it's my duty to educate consumers about residential mortgages. When obtaining a mortgage it's essential as a consumer to check at more than one place. Even though mortgage companies don't really like to be shopped, you as a consumer really won't know the figures if you don't check with a few brokers or lenders. Both, brokers and lenders have their pros and cons but in todays market to me it seems more convenient to check with brokers.

Brokers, usually are sigend up with 50+ lenders and typically in today's market brokers can give you somewhat of a better deal than a direct lender. It's almost a fact that a broker will always find you a lower rate, but broker's closing costs in most cases are $1000.00+ more than lender's closing costs. In this case, you as a consumer you must think through which is really better for you.

In my perspective, if you are refinancing or purchasing a home where you won't stay in for more than 3 years my suggestion is to go with the lender. But, if you are going to stay in that home for more than 3 years, in that case getting a mortgage through a broker is more recommended.

When you deal with a broker, try to negotiate your way of not paying an appraisal and or credit report fee. In many cases a broker will accept these terms. (Trust me) Also, never accept closing costs to be over $3000.00 as nowdays closing costs are less than $2000.00. Finally, don't buy down the rate. What you are qualified for is what you should accept or not accept but never pay points to buy down the rate. It's money out of your pocket (thousands) to save $15-50 a month. (Not worth it)

Is Real Estate Investing Becoming Harder?

noreply@blogger.com (MortgageDoctor) — Sat, 10 Mar 2007 04:05:00 +0000

A few years ago, when there was a big hype about Real Estate Investing many people tried to get get their share (and many got theirs). Individuals bough second homes or non-owner properties with equity in them and sold them quickly for profit. However, this industry is pretty much going into a direction of extermination. I already mentioned that many got their share and profited by investing in properties with equity and by selling them quick. However, many people that got into real estate investing gor really burned.

Paying a monthly mortgage payment is overwhelming itself, but paying for 2 mortgages (your home + investment property) can lead to total financial destruction. Many individuals have defaulted (foreclosed) on their investment properties and in the bigger economic picture made a very negative destructive impact. More than 30 lenders have closed their doors due to the high default rate in this country. Failure of individuals to support an investment property and their own home has a huge contribution to this big negative impact in the today's mortgage industry.

Today, it's not only hard to get a loan for an investment property, it's becoming really hard to obtain a loan for an owner-occupied home as well. My opinion on this is that not "everyone" could and should get into real estate investing. Yes, it's an enourmous market but it takes a lot of planning and research. I am not discouraging anyone to invest in Real Estate, but I am advising and urging everyone to consult with Real Estate & Mortgage professionals before making a move.

As things stand now, if you are heavy on your bank account and if you have a credit score that's higher than 700 only then shall you think about asking for an investment property loan. Otherwise, it's not really doable. It is if you have 20% to put down.

noreply@blogger.com (MortgageDoctor) — Fri, 09 Mar 2007 21:50:00 +0000

Reports: New Century near bankruptcy

Last Update: 3/9/2007 12:55:51 PM

Reports: New Century near bankruptcy

IRVINE, Calif., Mar 9, 2007 (UPI via COMTEX) -- New Century Financial, the No. 2 U.S. subprime mortgage lender, may file for Chapter 11 bankruptcy protection, reports said Friday.

The Irvine, Calif., company appears nearly out of liquidity and has not been able to negotiate the financing and credit waivers it needs to stay in business, the CNBC cable network reported.

The network and The Wall Street Journal said New Century got some financing from one of its biggest creditors, investment bank Morgan Stanley.

But the company's mounting woes suggest it may be forced to file for bankruptcy protection from creditors if it cannot find a suitor or sell assets soon, the reports said.

A New Century spokeswoman would not comment on the possibility of a bankruptcy filing or asset sales.

The company, plagued by rising defaults on its subprime mortgage loans -- home loans made to borrowers with weak credit -- said Thursday it stopped accepting loan applications because some of its backers refused to provide access to financing.

Copyright 2007 by United Press International ********************************************************************** As of Monday, 03-05-2007 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 10-19-2006 for NEW @ $37.84. For more information on Comtex SmarTrend Alert, contact your market data provider or go to SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright 2004-2007 Comtex News Network, Inc. All rights reserved.

I Was Right

noreply@blogger.com (MortgageDoctor) — Thu, 08 Mar 2007 01:27:00 +0000

Yep, I was right. I predicted that something big was going to happen in the mortgage industry and that rates would be lower. And that's what happened. First, the mortgage guidelines got strict and then that got followed by a bad economic day on wall street. And now many sub-prime mortgage lenders are starting to close their doors as well. Things are happening just as I predicted: The mortgage industry had some casualties, but the final outcome seems to be gradual increase in mortgage sales lately. Rates are low again and people are starting to buy homes and refinance their adjustable mortgages. Consumers, this might not last as there is less competition for the big dogs. Now could be your perfect opportunity to cash in on today's market.

Worst Over in 'Foreclosure Crisis'?

noreply@blogger.com (MortgageDoctor) — Tue, 06 Mar 2007 22:09:00 +0000

Foreclosure filings declined in February for the second straight month, indicating that the worst may be over in "America's home foreclosure crisis," according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm. Nationally, 106,074 filings were reported in February, down 3.4% from 109,851 in January, the company said. However, the numbers were still up nearly 65% from the 64,375 filings in February 2006. "The foreclosure numbers finally are beginning to reflect the stabilization in housing markets that we've been talking about for the last few months," said Alexis McGee, president of the firm. The company can be found online at http://www.foreclosures.com.

Mortgage Rates Mostly Lower As Concerns Over Housing Rise

noreply@blogger.com (MortgageDoctor) — Sun, 04 Mar 2007 22:35:00 +0000

Concern over the slowing housing market may be impacting mortgage rates according to Frank Nothaft, Freddie Mac vice president and chief economist, referring to the results of the corporation's Primary Mortgage Market Survey for last week. That survey indicated a general downward drift in rates.

"Mortgage rates eased a little more this week," Nothaft said, "as market participants were concerned over how much drag the slowing housing market may have on economic growth. For instance, last week's release of housing starts for January showed the weakest reading since August, 1997 due to the abundance of homes already on the market to purchase."

read more at http://www.mortgagenewsdaily.com/2282007_Mortgage_Rates.asp

Foreclosure Investing:

noreply@blogger.com (MortgageDoctor) — Sun, 04 Mar 2007 17:15:00 +0000

So what does it take to find a good foreclosed property with potential to make money? Well, I can answer that.
A lot of research must be done about the area:
- How fast the area is developing
- What is the average property sale time in the area
- Is there new construction?
- Schools, parks, shopping
- Mobility (are there most major express ways close by)

If you are going to buy this property through a Realtor it is essential to know how much you will be charged for selling the home.

If you are going to fix up the property it is essential to have everything on paper as far as costs go.

Otherwise, the whole other process is like buying a regular property.

I recommend to work with a Realtor for few properties (if not all). Yes, the costs would be less if a Realtor was out of the picture but their expertise are very important if deciding to invest in foreclosed properties.

I myself have started investing in foreclosures. Even though my passion are mortgages I am starting to make a lot more money in foreclosed homes investing.

If anyone is interested in learning more e-mail me. I would gladly pass on my knowledge as this is a market that can never be completely capitalized.

Interesting Article I Found Online...

noreply@blogger.com (MortgageDoctor) — Sun, 04 Mar 2007 06:18:00 +0000

http://www.1st-mortgages.com/shared/mortgage.story.html

"You Can't buy a Dollar for 99 Cents" By Anonymous

Many of us make the age old mistake of thinking we can "get something for nothing". We all want the very best mortgage refinance deal. At heart, we not only want to save, but more importantly we want to be smart, or at least be able to tell others how smart we really are.

Well, this is where my story starts. Shrewdly shopping for a mortgage loan, like no other has before. I talked to dozens of mortgage lenders and mortgage brokers. I quizzed them about rates and fees. I drilled each about APRs and asked about hidden fees. I had each of them "send me more info". Boy, was I doing good. I wasn't going to get taken. Not me.

Three weeks into mortgage "webbing" I ran into, what seemed like a slow typing Southern mortgage broker who seemed to be exactly what I was hunting for. She had all the answers and took the time to explain each time I asked for more info. All my communication to date had been e-mail, faxes and even an express mail. I decided we had enough of a repoire to give out my phone number.

When Rebecca did call I wasn't surprised at how she sounded, as I had pictured her perfectly and just knew she was going to be. A slow, methodical and professional mortgage broker. She at once calmed any fears I had remaining. After all, what was I to be frightened of. I had done my homework, talked to numerous lending sources, I knew the lingo. No one was going to pull a fasty on me.

This was it, time to pin her down. So I asked the big question. "What interest rate can I lock today". The rate quote I got was an interest rate which was a full ¼ point less that any other mortgage broker or lender had given me. It paid to have done all this work. I had proven I was absolutely the smartest borrower that has ever lived. I took the deal before she changed her mind, thinking maybe she had made a mistake and I didn't want her to back out of the deal.

I mailed all of the requested documents and signed every document presented me. About three weeks into this deal of the century I was sent a benign looking Government disclosure saying something about my APR and fees. Since I didn't want to look stupid I signed and returned it. My homework didn't prepare me for Government paperwork, and after all I could trust my mortgage broker. After all I had found her amongst all those others who were trying to rip me off with those much higher interest rates. My mortgage closed. I had ended up paying 4 points, $5,500. Instead of telling my friends how brilliant I am, I'm confessing my stupidity anonymously, to each of you who have had similar "horror" stories. What I realized is that you can't buy a dollar for $.99.

http://www.1st-mortgages.com/shared/mortgage.story.html

FLIPPIN IS NOT ALWAYS A DIRTY WORD...

noreply@blogger.com (MortgageDoctor) — Sun, 04 Mar 2007 06:14:00 +0000

Flipping' is not always a dirty word

Real Estate Adviser by Steve McLinden • Bankrate.com

Dear Real Estate Adviser,
Why is it called "flipping" when an investor buys a house under value and sells it for what it's worth? Whenever I hear the word, it seems to have a negative connotation.
-- Tina R.

Dear Tina,
You've really hit on something here, especially with your "sell it for what it's worth" comment. But let's back up for a second. Some honest and handy rehabbers who buy properties that are physically and (or) financially distressed, then promptly fix them up and turn them over -- or "flip" them -- to a new owner are being punished because of rising mortgage fraud over the past decade.

Sadly, it was the old "one-bad-apple" syndrome that caused most of the acrimony. During the overheated housing market of the late 1990s and early 2000s the distinct odor of greed wafted over the industry. Not satisfied with healthy profits, a number of participants sought excessive profits and didn't let things such as ethics and the laws get in the way.

rest of the article at:

http://www.bankrate.com/cnn/news/real-estate/20070127_adviser_flipping_dirty_word_a1.asp?prodtype=mtg

Mortgage Refinancing Gets Tougher

noreply@blogger.com (MortgageDoctor) — Sun, 04 Mar 2007 06:12:00 +0000

Mortgage Refinancing Gets Tougher

by Ruth Simon
provided by

With rates on many homeowners' adjustable-rate mortgages rising, some who would like to refinance into a new loan are finding they can't.

In some cases, that is because their loan carries a prepayment penalty, which would force them to come up with thousands of dollars if they refinance in the first few years. Such penalties are common with so-called option adjustable-rate mortgages, which typically carry a low teaser rate that rises sharply after an introductory period.

Other borrowers are getting caught short by a changing housing market -- one in which home prices have flattened and lenders are beginning to tighten their standards after a long period of making mortgages easier and easier to get. The challenges are greatest for homeowners whose credit has declined since they took out their last loan and for those who have little if any equity. Some of these borrowers are still able to refinance but are finding it more costly than they expected.

These new challenges come at a time when many borrowers who took out adjustable-rate mortgages are facing higher payments. There are about $1.1 trillion to $1.5 trillion in ARMs that will face rate increases this year, according to the Mortgage Bankers Association. The MBA expects borrowers to refinance as much as $700 billion of those mortgages.

more at: http://finance.yahoo.com/loans/article/102417/Mortgage_Refinancing_Gets_Tougher;_ylt=AoRGcoNi6Fh1cThG227liLzUrdIF

PMI Not Tax Deductible For Everyone....

noreply@blogger.com (MortgageDoctor) — Fri, 02 Mar 2007 05:29:00 +0000

After it was announced that on and after January 1, 2007 that PMI (private mortgage insurance) would be tax deductible for everyone, later on the law was finalized. The new law states that everyone who OBTAINS a mortgage on or after January 1, 2007 could deduct it from annual tax return. Another twist exists however, PMI will be tax deductible to those whose income is $110,000 or less.