mortgage

Simple Real Estate Definitions : Amortization

October 22, 2008

In the widest definition possible, amortization (pronounced: am-ohr-tih-ZAY-shun) is the scheduled process by which a loan’s principal balance pays down to $0. The opposite of an amortizing loan is an interest only loan for which there is no scheduled principal repayment schedule. With respect to mortgages, amortization is what determines how much of a monthly payment goes […]

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Effective December 13, 2008, Some Conforming Mortgages Will Require Larger Downpayments To Get Approved

October 21, 2008

In an effort to limit risky borrower behavior, Fannie Mae announced a new round of mortgage guideline changes last week. Unlike previous its previous 20-plus updates that raised income requirements and minimum credit scores (among other changes), Fannie’s latest guideline tweaks focus on the value of its underlying mortgage assets — home equity. Effective December […]

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Looking Back And Looking Ahead : October 20, 2008

October 20, 2008

Last week, the Dow Jones Industrial Average recorded both its largest one-day point gain and second-largest one-day point loss in history. Mortgage markets got whipsawed, too. From day to day, huge rate swings made mortgage rate shopping difficult.  It wasn’t uncommon for lenders to change pricing 3 times per day. When the week closed, though, […]

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The Rising Cost Of A Small Downpayment

October 17, 2008

Private Mortgage Insurance (PMI) is a mortgage lender’s insurance policy against highly-leveraged homeowners.  It’s typically required when homeowner equity is less than 20 percent at the time of closing. With PMI defaults up 40 percent over last year, though, private mortgage insurers are taking big losses. They’re also taking outsized steps to prevent additional claims going forward […]

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The Obvious Truth About Mortgage Rate Predictions

October 16, 2008

As the stock market dips then jumps then dips again, it’s important to remember that markets are unpredictable and nobody knows what will happen tomorrow. Unfortunately, that doesn’t stop the analysts from trying. An obvious example comes from May of this year.   As the price of oil crossed $120 per barrel on its way to an […]

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Why Homeowners With Adjusting Adjustable Rate Mortgages May Be In For A Surprise

October 15, 2008

For homeowners with soon-to-adjust adjustable rate mortgages, the recent banking turmoil worldwide may lead to budgetary pain. This is because most conforming ARMs made since 2003 are based on a borrowing cost called LIBOR and LIBOR is up an uncharacteristic 2 percent since September. LIBOR stands for London Interbank Offered Rate and is the rate at which […]

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Looking Back And Looking Ahead : October 13, 2008

October 14, 2008

Throughout the feverish activity on Wall Street last week, mortgage bonds sold off with force, driving mortgage rates to their highest levels since July. It was the fourth straight week in which mortgage rates worsened. But, with the mortgage markets closed Monday, stock markets rallied to their largest one-day gain in history. The Dow Jones’ […]

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How Falling Gas Prices May Stave Off Recession

October 10, 2008

Given the stock market’s recent performance, it’s not surprising that gasoline’s falling prices are garnering very little attention. That doesn’t make it any less relevant, however. Since peaking in July, gas prices are off by 20 percent. Falling gas prices are an important positive for the U.S. economy because less money spent at the pump means […]

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Why Mortgage Rates Haven’t Fallen As Expected

October 10, 2008

When the government nationalized mortgage lending in September, housing analysts predicted lower mortgage rates. For a brief two-week stint, they were right — post-takeover, the 30-year, fixed rate mortgage fell below 6.000 percent nationally for the first time in 7 months. Since then, however, mortgage markets have reversed. Rates are now at pre-takeover levels. Now, […]

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Foreclosures Fell 12 Percent in September 2008

October 10, 2008

According to foreclosure-tracking service RealtyTrac, the foreclosure rate is falling nationwide. Versus August, foreclosures fell by 12 percent in September 2008 as more than half of the states showed month-over-month improvement. Most interesting in the data is that several states that led the foreclosure boom in 2007 now appear to be leading the charge out […]

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The Impact Of The Federal Reserve’s Emergency Half-Point Rate Cut To 1.500 Percent

October 8, 2008

The Federal Reserve made an “emergency rate cut” this morning, dropping the Fed Funds Rate by one half-percent to 1.500 percent. The move is meant to stimulate the U.S. economy. When the Federal Reserve changes the Fed Funds Rate, it often takes 9 months for the changes to work their way through the economy. On […]

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Some People Were Thrilled To Watch The Stock Market Fall Below 10,000

October 7, 2008

Monday, the Dow Jones Industrial Average closed below the psychologically-important 10,000 level for the first time since 2004. Despite the milestone-marker breach, however, there was a large group of Americans with reason to cheer.  As stocks sold off, mortgage markets rallied to the benefit of home buyers and mortgage rates shoppers everywhere. Conforming mortgages rates […]

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Looking Back And Looking Ahead : October 6, 2008

October 6, 2008

Congress approved the $700 billion “Bailout Bill” Friday, answering the question that dogged mortgage markets all week long: Will they or won’t they pass it? The uncertainty prior to the vote created huge market swings that ultimately sent the Dow Jones Industrial Average to its worst week since the 2001 terrorist attacks, while causing similar […]

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Fannie Mae Halves One Of Its Mandatory Loan Fees

October 3, 2008

In an effort to provide “the most market support possible”, Fannie Mae is cutting one of its mandatory loan fees by 0.250 percent, effective immediately. Fannie Mae introduced the Adverse Market Delivery Charge in December 2007 to offset foreclosure and delinquency losses.  The initial fee was a quarter-percent of the amount borrowed. Then, as market conditions […]

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The Pros and Cons Of Making A 401(k) Hardship Withdrawal

October 2, 2008

As household budgets get pinched and credit markets tighten, a growing number of Americans are making “hardship withdrawals” from their 401(k) plans. One major fund group cites a 15 percent increase in activity from this time last year for various reasons including staving off foreclosure and medical emergency. However, 401(k) loans should only be made with careful […]

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Mortgage Rates Are Headed Higher AND Lower — Quickly

October 1, 2008

Monday, after the House of Representatives defeated the Emergency Economic Stabilization Bill of 2008, the stock market fell in historic fashion. The Dow Jones Industrial Average closed down 777.68 points, its largest one-day point loss ever. By Tuesday, however, optimism had returned to Wall Street. Assuming that the bill would pass in some form, investors poured back […]

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How Mortgage Rates Responded To The “No” Vote On The Bailout Bill

September 30, 2008

Monday afternoon, the U.S. House of Representatives defeated the $700 billion “Bailout Bill”, surprising Wall Street and the world. The Dow Jones Industrial Average responded by falling 777.68 points — its largest one-day loss in history and, this morning, every newspaper in America is covering the story as front page news. Lost in the coverage, […]

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Looking Back And Looking Ahead : September 29, 2008

September 29, 2008

Mortgage rates bounced around last week, ending up worse overall.  It was the second straight week in which rates deteriorated.  Sentiment was driven largely by the proposed Emergency Economic Stabilization Act of 2008 — a.k.a. The $700 Billion Bailout. The good news is that Congress drafted its bill Sunday evening and within the 110 pages, […]

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If My Mortgage Lender Fails, Are My Payments Still Due?

September 26, 2008

Thursday, federal regulators seized mortgage lender Washington Mutual.   The Seattle-based thrift became the third “big name” lender to close its doors since July, joining IndyMac and Lehman Brothers. In 2007, these 3 lenders represented about 10 percent of the mortgage market and their subsequent failures are confusing American homeowners. The most prevalent question: If my mortgage […]

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Falling Home Supplies Are Bad News For Home Buyers (But Good News For Home Sellers)

September 25, 2008

The August Existing Home Sales report was released Wednesday, showing a decline in the number of homes sold nationwide, and a reduction in the median sales price. Not surprisingly, the media singled these two statistics out, playing them as a big negative. They’re not. The decline in sales wasn’t good, but it wasn’t terrible, either — sales […]

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