Tuesday, September 30, 2014

Mortgage rates fall back after hitting 4-month high

Average fixed mortgage rates moved back down this week after last week's uptick.

The average rate on a 30-year, fixed-rate mortgage was 4.20 percent this week, down from 4.23 percent last week, Freddie Mac said in its weekly survey. Rates had hit a four-month high last week.

Meanwhile, the average rate on a 15-year, fixed-rate mortgage was 3.36 percent, compared with 3.37 percent last week.

Mortgage markets had a number of reports to digest this week. Sales of existing homes fell last month, while new-home sales improved. Also, there was more evidence of slowing growth in home prices.

source: http://www.chicagotribune.com/business/breaking/chi-mortgage-rates-fall-back-20140925-story.html

Monday, September 29, 2014

Applying for a fixed-rate mortgage? Why you need to do your homework

Imagine you’ve applied for a five-year fixed-rate mortgage. Then, before you close, the lender drops its best five-year fixed interest rate. You’d expect that new lower rate, right?

Most people in this position would. But with some lenders, that’s not the way it works.

If you’re going mortgage shopping, take a minute to understand your lender’s rate-drop policy before you send in your application. Too many people don’t and it ends up costing them.

How rate drops normally work
Typically, if you’ve been approved for a mortgage and the lender drops its rates before your closing date, the lender will lower your rate as well. Every lender has its own policies, though. For instance:

· Some lenders allow you only one rate drop. Others allow multiple.
· Some lenders only permit rate reductions up to seven days before you close. Others give you their best rate right up until your closing date.
· Some lenders automatically lower your rate. Others require your banker or mortgage broker to manually request the rate adjustment. In this latter case, you better have a reliable mortgage adviser or keep tabs on rates yourself.

The best-case scenarios are those lenders with “look-back” policies. This means they’ll look back and give you their lowest rate from the time you applied until the time you closed. Those lenders are few and far between but any good broker knows who they are.

Read more: http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/how-to-avoid-borrower-remorse-when-mortgage-rates-unexpectedly-drop/article20786065/

Friday, September 26, 2014

Reverse mortgages: They’re not always as painless as they seem

WASHINGTON — I have a long driveway at my home. Frequently, guests who are backing out in reverse drift left or right and tear up some grass.

What is it about driving in reverse that causes people to get so confused and go off track?

They often can’t figure out which way to turn.

The same could be said for reverse mortgages. Lots of people don’t fully understand how this type of lending product works, and the resulting confusion can leave them with a lot of regrets.

Reverse mortgages were largely created for seniors who are cash-poor but house-rich: They have a lot of equity in their homes. The idea was to allow seniors to remain in their homes by borrowing a portion of their equity to supplement their incomes.

To qualify for a reverse mortgage, you have to be 62 or older. But unlike with traditional home loan products, there is no monthly payment. The loan isn’t due until the borrower moves, sells, or dies.

The overwhelming majority of borrowers get a reverse mortgage through the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM) program.

I recently wrote about the loan product and many readers had questions and concerns. One wrote:

“It is recommended that the prospective borrower seek the guidance of a counselor. How independent are these counselors? My late cousin had obtained a reverse mortgage to supplement her limited pension. My impression was that the ‘counselor’ essentially presented my cousin with the different options of receiving the reverse mortgage (lump sum, monthly, etc.) rather than the associated costs, requirements and risks.”

Counseling is not recommended, it’s required by the Department of Housing and Urban Development. Borrowers have to use HUD-approved housing counselors, who must discuss not just how a reverse mortgage works and its eligibility requirements but the financial implications of getting this type of loan. They also are supposed to talk about alternatives. Their job is to help guide people to make their own decisions about whether the product is right for them.

Counselors are allowed to charge for reverse-mortgage counseling, but the agency must tell you about the fee before charging it. Fees are typically about $125, but some agencies charge less. Agencies are also required to waive the counseling fee if a borrower can’t afford it. You can pay the fee directly to the agency or out of your loan proceeds.

read more: http://www.bostonglobe.com/business/2014/09/25/michelle-singletary-column-reverse-mortgages/aAjxNovOSSZphRJ9vmLLkN/story.html

Thursday, September 25, 2014

5 Metro Areas With the Most (and Fewest) Underwater Mortgages

Of nearly 49.5 million mortgaged properties in the United States at the end of the second quarter of 2014, there are about 5.3 million where the mortgage amount is greater than the value of the property. These underwater or negative equity properties represent 10.7% of all mortgaged properties in the country. It is an improvement from the 12.7% of underwater properties at the end of the first quarter of this year.

Mortgage borrower equity had increased by approximately $1 trillion year-over-year at the end of the second quarter. The data were released Thursday by research firm CoreLogic.

The aggregate value of negative equity fell by $38.1 billion in the second quarter to a U.S. total of $345.1 billion.

Some 19% of all mortgaged properties have positive equity below 20%, and 2.6% had less than 5% positive equity at the end of the first quarter.

Read more: http://247wallst.com/housing/2014/09/25/5-metro-areas-with-the-most-and-fewest-underwater-mortgages/

Wednesday, September 24, 2014

Reverse mortgages are trouble

Celebrities Fred Thompson and Henry Winkler are misleading senior citizens when they claim there are no catches to reverse mortgages; in truth, reverse mortgages are full of catches.

They mention one catch: that the loan is paid back by the last person living in the home. The main catches are that the home must be in the exact-same shape at the end of the loan as it was at the beginning, and if the person who took out the reverse mortgage dies before the mortgage is repaid, the heirs cannot sell the home until they pay off the mortgage.

Avoid reverse mortgages like the plague; they are bad news and will cause a boatload of problems for the entire family.

read more: http://www.tennessean.com/story/opinion/readers/2014/09/24/reverse-mortgages-trouble/16106145/

Tuesday, September 23, 2014

Mortgage Lending Fell in 2013 as Rates Rose: Report

Mortgage lending fell in 2013 from the year before primarily due to rising interest rates that made buying a house more expensive, according to data released Monday by a group of banking regulators.

The Federal Financial Institutions Examinations Council compiles data annually on mortgage transactions from nearly 7,200 lenders including banks, savings associations, credit unions and mortgage companies.

According to the 2013 results released Monday, the number of mortgage originations declined 11% last year to 8.7 million from 9.8 million in 2012. The decline was caused primarily by a drop in refinance mortgages for one- to four-family properties, which fell by over 1.5 million, or 23%, according to the report, likely because mortgage interest rates increased significantly during 2013.

Last year signaled the end of a three-year boom in refinances, in which mortgage borrowers rushed to lock in the lowest mortgage rates in nearly 60 years. Rates were lowered in the wake of the 2008 financial crisis in an effort to spur lending and to kick start economic activity.

read more; http://www.foxbusiness.com/economy-policy/2014/09/22/mortgage-lending-fell-in-2013-as-rates-rose-report/

Monday, September 22, 2014

Many seniors trying to retire with a mortgage

When Tom Greco bought his four-bedroom home three decades ago, he assumed he'd pay off the mortgage before retirement — just as his parents did.

Things didn't work out that way.

Instead, his $4,500 monthly mortgage payments — a consequence of several equity withdraws over the years — became a financial drag.

"It's pretty hard to retire with that," the Irvine attorney, 66, said.

More and more older homeowners are carrying mortgage debt, a burden that threatens to delay their retirement and curtail spending among the massive baby boomer population.

Nearly a third of homeowners 65 and older had a mortgage in 2011, up from 22% in 2001, according to an analysis from the Consumer Financial Protection Bureau, using the latest available data.

The debt burden also grew — with older homeowners owing a median of $79,000 in 2011, compared with an inflation-adjusted $43,400 a decade earlier.

For decades, Americans strove hard to pay off their mortgages before retirement, an aspiration that when achieved was celebrated with mortgage-burning parties.

But for the latest retirees, reaching that goal, if they ever had it, is increasingly less likely.

Baby boomers bought homes later in life, and with smaller down payments, than previous generations, said Stacy Canan, deputy assistant director of the consumer bureau's Office for Older Americans. Many also refinanced during the housing bubble and used cash from their equity withdraws to pay off other debt, take vacations or put children through college.

read more: http://www.latimes.com/business/realestate/la-fi-boomer-mortgages-20140921-story.html