LoanBlog

Inflation Surge May Threaten Low Mortgage Rates

richard — Thu, 08 May 2008 19:35:53 +0000

Mortgage rates remained just above 6.0% for the third consecutive week. Some other headlines from the week offer a hint of what’s behind the recent creep upward in those rates:

For potential mortgage borrowers, the level of mortgage rates might be the only headline that draws attention, but the broader economic developments can provide some clue as to what to expect in the mortgage market during the weeks and months ahead.

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When You Assume…

lfreeman — Wed, 07 May 2008 17:33:45 +0000

If you have an adjustable rate mortgage (ARM) you have probably been bombarded with solicitations and exhortations to “fix it” before rates go sky-high. You are right to be concerned about the future but jumping into the nearest fixed rate mortgage could be a costly move.

Looking at recent ARM rate adjustments tells the story. Rates for many ARM borrowers have decreased lately. Before making any decision about refinancing to nail down a stable rate, get out your loan documents, find the Adjustable Rate Mortgage Rider, and look up the terms of your ARM. Locate the index that your rate is tied to (for example, the LIBOR, COFI, or T-Bill). The index is a published financial indicator and you should be able to look up its value easily online. This week’s 6-month LIBOR, for example, is 2.88%. Next, find the margin that your lender adds to the index to get your interest rate. If your loan is based on the 6-month LIBOR and carries a margin of 2.5%, your rate would be 5.38% if adjusting today.

OK, but what if a lender calls you up and says you can get a fixed loan at 6% right now? Should you go for it?

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Will First Time Borrowers Save the Housing Market?

Kate Cummings — Tue, 06 May 2008 16:54:24 +0000

Economist say we are seeing some action with first time home buyers. For the economy to rebound it has to start with the housing market, so can first time buyers boost the market or are there too few options available for this to happen? Also with lower housing prices, what do you need to do as a seller to make sure your house sells in this first time buyer’s market?

For more on this read:
U.S. housing slump may require tax credit to encourage buyers
Part one: Shoppers can get more house for their money across price ranges
First-time home buyers have few options

Home Valuation Conduct Codes: Good, Bad, and Ugly

lfreeman — Mon, 05 May 2008 22:31:26 +0000

Home valuation conduct codes are rules that Fannie Mae and Freddie Mac are expected to put into effect in 2009. They will bring marked changes in real estate lending. Here’s what these changes may mean to a home buyer or home owner.

The Good:

No one who stands to gain financially from a real estate transaction — including loan officers, mortgage brokers, or Realtors — will be allowed to order an appraisal to get property financed or refinanced. Only the actual lender can order it, and those involved in the loan production area will be precluded from ordering an appraisal or communicating with the appraiser in any way. This effectively eliminates the chance of anyone having influence over an appraiser. No one involved gets to have any choice in who is hired to appraise the property. No one gets to communicate a desired valuation to the appraiser.

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License Revoked! Cracking Down on Credit Cards

lfreeman — Thu, 01 May 2008 23:21:16 +0000

Credit card companies have pretty much had a license to print money for a long time. And while associations like Consumers’ Union, publisher of Consumer Reports, have long spoken out against some of the industry’s most questionable practices, nothing has changed much in at least ten years.

Enter the election year and the soft economy. Finally the lawmakers are feeling the heat — and if they have to toss credit card companies into the fryer to keep themselves out they will do it! Naturally, banks and credit companies are gearing up to fight hard. Lobbyists are already spinning out claims that regulation will cost consumers more and make less credit available. It’s pretty funny, actually. The ABA claims that credit card issuers are better-regulated and more consumer friendly than mortgage lenders and so don’t deserve to have the spotlight turned on them. “Credit cards are a highly regulated industry,” Ken Clayton, counsel for the ABA said. “The parallel doesn’t work.”

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