US long-term mortgage rates change little; 30-year at 2.87%

WASHINGTON (AP) — U.S. long-term mortgage rates changed little this week, flattening in recent weeks following a year-long decline amid economic anxiety in the recession set off by the coronavirus pandemic. Home loan rates have remained at historically low levels.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan eased to 2.87% from 2.88% last week. By contrast, the rate averaged 3.57% a year ago.

The average rate on the 15-year fixed-rate mortgage ticked up to 2.37% from 2.36%.

The low borrowing rates have bolstered demand by prospective homebuyers, who on the other hand have been constrained by the scarcity of available homes for sale.

In the latest sign of the flagging economic recovery and continued elevated level of job cuts, the government reported Thursday that the number of Americans seeking unemployment benefits fell slightly last week to a still-high 840,000.

-Associated Press

The Top Questions to Ask Your Lender Before a Refinance

You waited long enough – interest rates are right where you want them so you are ready to refinance. Before you jump in head first, you should ask your lender the following important questions.







What is the APR?

Don’t let yourself get so focused on the interest rate that you forget about the APR. The APR is the total cost of the loan, including the closing costs in percentage format. It gives you a better idea of what the loan actually costs you.

Sometimes loans with low-interest rates actually have high APRs because of the excessive fees charged. The APR can help to keep you in line and avoid you from refinancing when it’s really not worth it. It’s so easy to get caught up in the low-interest rate that you completely overlook what the loan will cost in the end.

Is There an Origination Fee?

If you are using a lender other than your current lender, you may pay an origination fee. Even if you use your current lender, don’t just assume they won’t charge it – ask them. Lenders charge an origination fee when they think an applicant has a risk of default. Unless you have exceptional credit and a super low debt ratio, you have some level of risk of default; it’s only natural.

Not all lenders charge the origination fee, but if they do, it can really make your closing costs get expensive. One point in an origination fee equals 1% of your loan amount. If you have a $200,000 loan, that’s $2,000 on top of all of the other closing costs.

Can You Pay a Discount Fee?

The discount fee is an optional fee. If you want to buy your interest rate down, you’ll pay the discount fee. Lenders usually discount the rate 0.25% for every point that you pay. Each lender has their own pricing structure, though.

Make sure you look at the big picture before you decide to pay the discount fee. First, will you stay in the home long enough to realize the savings? Remember, you have to pay off the closing costs before you truly start putting the savings in your pocket. Also, is the savings enough to make it worth it? If you’ll only save $25 a month, do you really want to pay thousands of dollars? It will take many years for it to make it worth it.

When Can You Lock the Rate?

Just like when you bought your home, you need to lock the interest rate. You’ll have a certain amount of time to close the loan before the rate lock expires too. Luckily, you can usually take a smaller lock period with a refinance because you don’t have to do any of the legal work that was necessary when selling the home.


Make sure you know the cost to lock the rate (if any) and the consequences of an expired lock. You don’t want to find out the hard way that you’ll have to pay to re-lock your interest rate because you locked it too early.

What’s the Turnaround Time?

If you are in a hurry, such as is the case with some cash-out refinance loans, you’ll need to know how long it will take the lender to process your loan. don’t be afraid to ask what the turnaround time is and what you should expect as far as a closing date.

If you are getting cash out of your home’s equity, you’ll want to know when you’ll receive it. Plus you need to schedule your life around the closing. For example, your closing date will affect when you have to make your first payment. If you have a month off, you can use that extra money that you’ll save to cover your closing costs. If you close at the beginning of the month, though, you won’t have that month off; your first payment will be due the next month.

Who Will Service Your Loan?

Finally, you should know who will service your loan before you close on it. If the lender doesn’t do their own servicing or they know they will sell your loan, you’ll need the details of where your loan will land. Just because you like the lender you are using now doesn’t mean that you’ll like the company that services your loan.

The loan servicer is actually the company that you’ll have the most communication with so you want to make sure that it’s a company that you like. If your lender can’t tell you exactly who will service your loan, they can at least tell you the possibilities of who will so that you can do your research and decide if it’s the right loan for you.

Take your time to ask your lender these important questions before you refinance. They will give the answers that you need to make the best decision about your refinance. Since you already own the home, you aren’t under any pressure to refinance like you were when you bought the home and needed financing. This time around, you’ll have more time and be able to make clear choices.

source: blownmortgage.com

Qualifying for USDA Loan with Low Income

Consumers often shy away from applying for a mortgage when they know their income is too low to qualify them for a program. While this might be true for traditional type loans, such as the conventional loan, there are options out there for people with smaller incomes. If your desire to become a homeowner is held back by your lack of income, consider looking into the USDA loan, a successful option for those with lower incomes. This successful loan program which is offered by the United States Department of Agriculture offers flexible guidelines, low-interest rates, and fewer requirements than most other loan programs.

Little Money Needed

The down payment requirement is often what holds people back from purchasing a home. The all-too-common need to put down 20 percent on a home is what people focus on, thinking that they will never be able to afford a home with that kind of money required up front. On the contrary, the USDA loan does not require any money down – you can finance 100 percent of the purchase price of the home. Right off the bat, this takes a huge amount of pressure off of the buyer as there are not thousands of dollars needed up front to purchase the home. In addition to not needing a down payment, you may be able to finance the closing costs into the loan, including the funding fee of 2.75 percent of the loan amount. You are able to finance up to 102 percent of the value of the property, according to the USDA, which can include the funding fee and closing costs. If you offered a lower amount for the home than it is worth, you have even more room to roll closing costs and the funding fee into the loan amount.

Low Monthly Payments

Sometimes it is not just the down payment that scares people away from applying for a mortgage, but the monthly payments as well. If you have a high interest rate, your payment is going to be high, even if the home you purchase is relatively cheaper than other homes in the area. With the USDA loan, however, the interest rates charged are much lower than any other loan program. Typically, they do not alter with debt ratios or credit scores, giving everyone that qualifies for this program a low interest rate and affordable monthly payments. Since the USDA program is for low-income families and homes that are located within rural areas, the purchase price of the home is not going to be very high as it is, further contributing to the affordability of the mortgage payment. In addition, the mortgage insurance that the USDA charges for any mortgage that has a loan-to-value ratio higher than 80 percent is well below the costs of any other program, giving you even more reasons to be able to afford the loan.

Flexible Guidelines

Credit scores, debt ratios, and income requirements often render many potential borrowers ineligible for a loan program, but that is not often the case with the USDA loan. In fact, the less money you make, the more eligible you become for the loan. This is not to say that they do not have credit or debt ratio guidelines in place – they do, but they are much more flexible than other programs, including FHA and VA loans. The guidelines include:

    Minimum credit score of 580, but if your score is less than 620 but higher than 580, you will have to go through some additional evaluation to ensure that you can afford the loan. If your score is higher than 620, the guidelines are very simple to meet. If you do not have a credit score due to insufficient credit reporting, you are eligible to use alternative trade lines, such as insurance, utility, or rent payments.
    Your income cannot be higher than 115 percent of the average income for the area. Every area differs, but you can find the maximum amount for your area on the USDA website. They do offer allowances on your income if you have children, elderly, or disabled family members living with you, enabling you to increase your chances of having income low enough to qualify for this affordable program.
    Your credit history should show on time payments with no more than 2 late housing payments within the last couple of years. Your other payments should also be timely for the most part; however, a few late payments will not disqualify you for the program, especially if your credit score is above that 620 range.

The USDA loan makes it possible for people with low income to qualify for a loan. Granted, you have to purchase a home in a rural area, but a large majority of the United States falls into this category. A search on the USDA website will show you where these affordable homes are located, enabling you to purchase a home despite your low income and put the days of renting behind you.

source: blownmortgage.com

Wells Fargo admits deception in $1.2 billion US mortgage accord

Wells Fargo & Co (WFC.N) admitted to deceiving the U.S. government into insuring thousands of risky mortgages, as it formally reached a record $1.2 billion settlement of a U.S. Department of Justice lawsuit.

The settlement with Wells Fargo, the largest U.S. mortgage lender and third-largest U.S. bank by assets, was filed on Friday in Manhattan federal court. It also resolves claims against Kurt Lofrano, a former Wells Fargo vice president.

According to the settlement, Wells Fargo "admits, acknowledges, and accepts responsibility" for having from 2001 to 2008 falsely certified that many of its home loans qualified for Federal Housing Administration insurance.

The San Francisco-based lender also admitted to having from 2002 to 2010 failed to file timely reports on several thousand loans that had material defects or were badly underwritten, a process that Lofrano was responsible for supervising.

According to the Justice Department, the shortfalls led to substantial losses for taxpayers when the FHA was forced to pay insurance claims as defective loans soured.

Several lenders, including Bank of America Corp (BAC.N), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE) and JPMorgan Chase & Co (JPM.N), previously settled similar federal lawsuits.

But Wells Fargo held out, and its payment is the largest in FHA history over loan origination violations.
Friday's settlement is a reproach for "years of reckless underwriting" at Wells Fargo, U.S. Attorney Preet Bharara in Manhattan said in a statement.

"While Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust," Bharara added.

The accord also resolved a probe by federal prosecutors in California of alleged false loan certifications by American Mortgage Network LLC, which Wells Fargo bought in 2009.

No one has been criminally charged in the probes, and the Justice Department reserved the right to pursue criminal charges if it wishes, according to the settlement.

Franklin Codel, president of Wells Fargo Home Lending, in a statement said the settlement "allows us to put the legal process behind us, and to focus our resources and energy on what we do best -- serving the needs of the nation's homeowners."

Lewis Liman, a lawyer for Lofrano, did not immediately respond to requests for comment.

Wells Fargo on Feb. 3 said the settlement would reduce its previously reported 2015 profit by $134 million, to account for extra legal expenses.

source: interaksyon.com

Sweden limits mortgage loans to...105 years

STOCKHOLM, Sweden - Swedish lawmakers adopted Wednesday a law limiting mortgage loans to 105 years as the Scandinavian nation seeks to come to grips with high property prices and debt levels.

There had previously been no legal limit on the duration of mortgages, and in fact many Swedish homeowners have been taking loans which only their grandchildren would have a chance to pay off.

The practice developed as a strategy to cope with high property prices as a longer term means monthly payments are lower. But inheritors are left with repaying the balance of the mortgage, often by selling the home.

Swedish regulators calculated in 2013 that the average mortgage term was around 140 years.

Nearly one-third of mortgages issued in 2014 allowed borrowers to repay only interest.

New mortgages will have a 105-year repayment limit as borrowers will be required to reimburse a minimum amount of the loan capital each year, after a five-year grace period on loans for new homes.

"It is important that we have a solid culture" of repayment, the chairman of the parliament's finance committee, Social-Democrat Fredrik Olovsson, was quoted as saying by the Aftonbladet newspaper.

Swedish banks opposed the law.

"It isn't good for the finances of households as it will make mortgages more expensive and the terms not as good. And it isn't good for financial stability," the head of Swedish Bankers' Association, Hans Lindberg, told the financial daily Dagens Industri.

Housing price inflation has resulted in Swedish households being among the most indebted in Europe. Mortgage holders on average have a debt that is 366 percent their annual income.

source: interaksyon.com

Swiss central bank introduces negative interest rate

Zurich, Switzerland - Switzerland's central bank on Thursday announced it was introducing negative interest rates, in a bid to stop the Swiss franc -- a safe haven currency -- from gaining further value.

The Swiss National Bank is imposing a rate of -0.25 percent on certain bank deposits, with the aim of pushing the target range of a benchmark interest rate into negative territory.

The rate on so-called sight deposits, funds which can be accessed immediately, will come into force on January 22 and only apply to balances above a certain threshold.

The SNB said the aim was to take the three-month Libor rate, which Switzerland uses to determine interest rates on mortgages and savings accounts, into negative territory.

The target range for Libor -- officially the franc's three-month London interbank offered rate -- is now between -0.75 percent and 0.25 percent, down from between 0.0 and 0.25 percent.

Analysts have been expecting the bank to push rates into negative territory, which is designed to make it less attractive to hold Swiss franc investments.

The SNB reiterated its "utmost determination" to stop the Swiss currency gaining value and to keep to an exchange-rate floor of 1.20 francs to the euro, in a bid to protect the country's vital export industry.

"Over the past few days, a number of factors have prompted increased demand for safe investments," it said.

"The introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange rate.

"The SNB is prepared to purchase foreign currency in unlimited quantities and to take further measures, if required."

source: interaksyon.com

How Much Mortgage Can I Afford?

Due to the economic crisis and mortgage crisis that swept the United States, not to mention the fact that many people have been concerned about a housing bubble bursting here in Canada. One of the policies that came out of the situation was that the maximum mortgage length was dropped from 35 to 30 years, and then to 25 years.

Even without that change, it still makes sense to think that you might be asking how much mortgage can I afford? When you look at the situation in terms of monthly cash flow, this makes a big difference. As you start thinking about the type of home you want to buy, make sure that you pay attention to the monthly payment, and how it fits into your regular budget.





For most people, the difference in the maximum amortization length shouldn’t be a deal breaker. However, it does force people to pay off their houses sooner. On top of that, it also means that some buyers not might be able to get the same size mortgage. While most buyers will still be able to get a home, though, some fringe buyers will be forced out of the market, since this will increase their debt service ratio and could be the difference between qualifying for the mortgage or not.

If you think that you might not be able to afford a mortgage with a shorter amortization schedule, you should consider some of the options out there designed to help you boost your ability to afford a mortgage:

Home Buyers Plan

One way to make your home more affordable is through the Home Buyers’ Plan, which allows you to borrow $25,000 from your RRSP to put towards your down payment. Your spouse can withdraw $25,000 from his or her RRSP as well. So if you both have saved up enough in your RRSPs, this can be a great way to come up with $50,000 to add to your down payment and reduce your mortgage.

This is a nice bonus, since you wouldn’t normally be able to take money out of your RRSP before retirement. But this is a viable option. When you make a bigger down payment, you reduce the amount that you borrow, also reducing the amount of the monthly payment. It’s a good way to use your assets to purchase a home that is more affordable.

TFSA

Another great way to save up a down payment is to use your TFSA, which now provides $31,000 in contribution room if you were at least 18 in 2009, $62,000 if you have a spouse, that’s also saving up towards your new house. The TFSA is great, since you can take advantage of tax-free growth, and you don’t have to worry about penalties.

Figuring Out How Much You Can Afford

You also need to know how much mortgage you can afford before you raid your registered account for a down payment. There are different rules of thumb that can help you figure out how much home you can afford. Some suggested that you should limit your mortgage payment to 30% of your monthly income.

While the 30% rule can be a good start, the reality is that you need to consider what makes you comfortable. Look at your situation. Consider how much debt you already have. If you have a lot of debt, you need to keep your mortgage payment low. Additionally, you should also consider what might happen if you lose some of your income. You don’t want to have a mortgage payment that is so high that you are worried about defaulting if something goes wrong.

The mortgage rules that the CMHC announced a few years ago will certainly make it more difficult for some to get a mortgage. However, that doesn’t mean that you don’t have a chance at a mortgage. If you put together a decent down payment with one (or both) of the ideas above, and if you can be realistic about how much house you really need to buy, you can qualify for a mortgage and pay it off sooner!

source: canadianfinanceblog.com

How to Choose a Realtor

My husband and I have been saving for a down payment on a house for the past year. So like most young married couples looking to buy a house, we go to a lot of open houses on the weekends just to see what’s out there.

On one hand, you get a good sense of the real estate market. On the other hand, it’s like going to a bakery while you’re on a diet—you can look but you can’t buy.

One of the things we were concerned about when it came to buying a house was finding a realtor.

When we first went to get some information from our credit union about getting a mortgage, they automatically set us up with a realtor that had affiliations with the bank. That should have been our first indication not to go with that realtor.

However, since we were just happy to now have access to the MLS listings, we didn’t think anything of it. It wasn’t until we found a place in our price range that we emailed the realtor and told her we wanted to see the place.

On our first open house tour, she was curt, unapproachable, and definitely not warm. I felt so uncomfortable around her. What had we gotten ourselves into?

Here are some tips on choosing a realtor and how we finally found a realtor we could trust.

Get Recommendations from Friends

If you have a friend you trust, or if your friends have recently gone through the home buying or selling process themselves, ask them for recommendations.

Most people actually like their realtor because they spend a lot of time with them, so recommendations should be easy to come by. One word of advice though: Always be attentive when you start mixing business with pleasure. Meaning, if you don’t end up liking the realtor your friend recommends, don’t blame it on them and don’t ruin a friendship over faulty advice.

Read reviews

These days you can read a ton of reviews online and see which realtor might make a good fit for you. Perhaps you don’t care so much about personality, and would prefer to just have the top expert in the neighborhood you’re looking for. It’s up to you to decide what’s most important in a realtor. Just remember: sometimes, you really get what you pay for.

Interview Them

You can choose to meet several different realtors to gather an idea of what you’re looking for and see whom you really click with.

We actually found our realtor at one of the open houses we visited. While we didn’t end up buying the house, we really loved the realtor. He seemed very matter-of-fact and down-to-earth.

We chose to go with him as our realtor because we really liked his personality and felt that he was very credible. He’s been a wealth of information as we look to buy our own home.

source: everythingfinanceblog.com

Mortgage approvals down since nosier tests

Mortgage approvals have fallen to a nine month low.

The new affordability tests, which ask a variety of quite tough and nosey questions, are said to be the main cause for this, and hence having a knock on effect on the housing market.

The approvals fell for a third month in April 2014, according to the Bank of England, and these new rules are said to be part of the reason.

The seasonally adjusted figures showed that a total of 62,918 house purchase loans were approved during April, the lowest number since July 2013. It’s also markedly lower than the previous six months’ average of 70,132.

Analysts reckon that these figures, along with those of an increase in manufacturing, showed that the UK economy was undergoing a hoped-for rebalancing away from housing and consumer-dependent growth to an industry-based model.

A man with a great name – Samuel Tombs, who is UK economist at Capital Economics – had this to say:

“The data has provided more encouraging evidence that the recovery is shifting away from its excessive dependence on housing and consumers towards industry”

So the economy may be showing signs of recovery, but be cautious, as these tests may actually really start dragging on the property market. While it’s still happening with house-buying and that, and the market is still vibrant with house prices in England and Wales rising 6.7% in April compared with the same month last year, according to the Land Registry.

The slowdown in approvals over the spring means that in April mortgage lending to homebuyers was 17% below its recent peak of 75,838 in January, when total lending peaked at 124,358 approvals.

Remortgaging has also dropped off since the start of the year, with 31,703 loans approved for existing borrowers who were not moving house. This is below the previous six-month average of 34,316.

The total value of mortgages approved fell to £15.7bn in April, down from £16.3bn in March, while loans for house purchases dropped from £10.6bn to £10bn.

So that’s all super news if you ever do find yourself on the property ladder.

source: bitterwallet.com

Iceland defies IMF, writes off 24,000-euro mortgage of each household

REYKJAVIK - The Icelandic government said Saturday it would write up to 24,000 euros off the mortgage of every household, making good on an election campaign promise despite international warnings over the plan.

The cost of the measure is estimated to reach 150 billion krona (900 million euros, $1.2 billion) over four years, the government said in a statement, without giving details on how it would be financed.

The Progressive Party -- led by Prime Minister Sigmundur David Gunnlaugsson, winner of late-April elections -- had won voters over with its campaign promise to offer household debt relief.

Gunnlaugsson has said since taking office that the scheme would not hurt public finances, and had initially suggested that foreign creditors of Icelandic banks would bear the write-off.

But there have since been no details on the financing plan for the scheme.

The debt relief promise has been met with skepticism elsewhere, with both the International Monetary Fund and the Organization for Economic Cooperation and Development warning against it.

The IMF had said that Iceland has "little fiscal space for additional household debt relief", while the OECD had called for the mortgage relief efforts to target only low-income households.

Standard & Poor's had also slashed the outlook for Iceland's long-term credit rating to negative from stable, saying the plan could damage foreign investors' confidence if it is to be funded by existing creditors of Iceland's banks.

The agency further warned that it could still lower Iceland's ratings over the plan.

Many Icelandic households are struggling to repay housing loans indexed to inflation that seemed safe prior to the 2008 financial crisis but has caused borrowing costs to skyrocket following the krona's collapse against other currencies.

"Currently, household debt is equivalent to 108 percent of GDP, which is high by international comparison," said the government in a statement.

"The action will boost household disposable income and encourage savings," it said, adding that the debt relief would begin mid-2014.

source: interaksyon.com

Comparing Mortgage Offers Online

Canada’s housing market is filled with overpriced properties, which means fewer people are interested in buying a home of their own.  But over the past year, restrictive measures from the government slowed down the number of homes that are actually selling.  As the trend continues and owners are unable to offload their specific properties, prices inevitably must come down.

Buying a home is arguably one of the most expensive investments a person can make, but unless you have a savings account stashing away the national average home price of $400,000, you will require a mortgage.  Qualifying for a mortgage requires an adequate credit score, and enough savings to put down a down payment on a home.  The quality of your credit score and the size of the down payment both contribute to the mortgage interest rate you receive.

However, the art of negotiating for the mortgage loan is different in today’s market compared to years past.  In the old days, a loan applicant would be forced to meet with a banker or a mortgage broker, and plead the case for home financing.  This process required a significant amount of time, and likely cost more money than necessary.  Many creditors prefer dictating what they feel is a reasonable mortgage interest rate, and expect you as the applicant to accept their terms.

Thankfully, technology in today’s market simplifies the application process, and can potentially save you thousands of dollars over the lifetime of your mortgage loan.  There are now websites that act as one-stop shops for comparing mortgage interest rates from some of the leading providers across Canada.  Using these sites and the mortgage calculator tools, you can find the best advertised rates within minutes.  Offers from all viable competitors are available in one place, which puts the leverage for a fair mortgage loan back in your hands.

Many Canadians don’t realize that even a fraction of a lower mortgage rate percentage can save potentially tens of thousands of dollars by the end of the loan term.  This means you make smaller monthly mortgage payments, and the interest remains significantly lower than it would be otherwise, which means you pay closer to the amount that you borrow.

Opportunities are out there to find an affordable home in Canada, and online mortgage comparison helps you acquire the best options in no time at all.

source: marriedwithdebt.com

Ways to Renegotiate Your Mortgage

If you are like many Americans struggling to make your monthly mortgage payment, you are not alone.  While the current economy has many struggling, the good news is that banks are more likely now to work with you than ever before.

Because banks have had to foreclose on so many homeowners, they would rather negotiate with you than have another foreclosure where they will likely lose money.  Banks want to get paid, and they now understand that the best way to get their money is to work with you, the borrower.

What You Need Before You Begin to Renegotiate

If you would like to renegotiate your mortgage, you will need several documents to prove that you are having a hard time making your payments.  You’ll want to round up your credit card statements, loan statements, unemployment information (if applicable) or your last paycheck stub, your last two years’ tax returns, and your checking and saving information as well as possibly other investments you have.

Ways to Renegotiate Your Mortgage

There are two main ways you can renegotiate your mortgage.  Which way you chose depends on several variables.

1.  Work with the lender.  Call the lender and honestly tell them that you are having a hard time making your monthly mortgage payment.  You will need to also tell them why you are having trouble, whether that be because of job loss, an injury or illness or another reason.

Ideally, the best time to work with the lender is before you fall behind on your payments.  This was not traditionally the case, but times have changed, and the lender wants to hear from you and work with you as soon as possible.

2.  Consider refinancing.  If you have more than 10% equity in your home and a credit score of 720 or higher, you may be a good candidate for a refinance.  Refinancing can lock you into a lower interest rate and give you a lower monthly payment that you will be able to afford.

While you may initially work with your own lender on a refinance, that is not your only option.  You can contact a mortgage broker who can help you find the best offers, or you can look around yourself and compare rates.  If you belong to a credit union, don’t forget that credit unions often offer lower rates than banks do.

In addition, consider changing the terms of your loan.  If you have a fixed rate mortgage, a 5 year adjustable rate mortgage may give you some breathing room with a lower interest rate and lower monthly payment.  This alternative is especially attractive if you plan to move within 5 years.

If you are having trouble making your mortgage payment, don’t despair.  You are certainly not the only one who has been in this situation, and you will likely find your lender willing to work with you.  Even if your lender isn’t, there are likely other lenders who will work with you and be glad to get your business.  Remember, in general renegotiating your existing mortgage is easier than getting a new mortgage.

source: everythingfinanceblog.com

Lifestyle changes and how they affect your mortgage

Maybe you just lost your job. Perhaps you just had a baby. Or,maybe you’re planning your wedding. No matter the reason, any time your lifestyle changes is an opportunity to evaluate your home loan, to help you reduce your expenses and maximize the money in your pocket.

Major Illness or Job Loss

If a pink slip or a major illness knocks you out of work for a few months, you may panic as you wonder how you’re going to make ends meet. Fortunately, there are ways to rearrange your mortgage to make the situation work for you.

Your first step may be to refinance. Use a mortgage calculator to see how much you could save by refinancing to a loan with a lower interest rate; mortgage rates are currently near historic lows, meaning now is a great time to shop around. Depending on your current interest rate, a refinance could save you hundreds of dollars a month in mortgage payments.

If that’s not enough, you may consider a forbearance. This option allows you to halt your mortgage payments, typically between six and twelve months, until your financial situation is less dire; then, you’ll have another six to twelve months to repay the interest and principal payments that accumulated while you were out of work. Most lenders will only offer a forbearance to borrowers who can prove their financial hardship is temporary, typically lasting six months or less.

Here Comes the Bride

If wedding bells are in the future, it’s a great time to look at your mortgage using a home loan calculator. Marriage means not only joining your lives, but your finances as well. If you’re in the market for a new home, adding in a second person to your family – and a second income – can increase the amount you may qualify for. If your partner has a strong credit score, he or she may also help you qualify for a lower interest rate based upon it.

You may be tempted to draw money out of your property to pay for your wedding through a cash-out refinance. This is where you liquidate some of the equity in your home to pay for expenses. If at all possible, resist the urge. For one thing, a wedding is a day, while your home is your shelter for months, maybe even years, down the road; reducing your financial stake in your home to pay for a one-day party is putting the cart before the horse. If you need more convincing, you should know that withdrawing some of your home’s equity will lead to higher mortgage payments, since you’ll have a higher principal to pay down on the loan.

And Baby Makes Three!

If your major lifestyle change involves starting a family, you’ve likely already started evaluating everything in your world, whether it’s the arrangement of furniture in a previously unused bedroom (where will the crib go?) to when – or if – you’ll return to work after the baby’s born. Spending some time with a mortgage calculator should be on your list, too.

Although the U.S. Government does not offer paid maternity leave to new parents, you can take advantage of the Family Medical Leave Act, or FMLA, which guarantees new moms and dads up to 12 weeks of leave – unpaid leave. To bridge the gap in finances during that period, consider refinancing your mortgage to a lower rate. Not only could you save hundreds of dollars a month, depending on your current interest rate, but you may also be able to “skip” a mortgage payment while you refinance from one loan to another.

One thing to consider here: my husband and I refinanced right after the birth of our first child. Shortly thereafter, we discovered that our previously-roomy house wasn’t big enough for our growing family. However, the refinance had really locked us in to staying in our home for the foreseeable future. In other words, the birth of a child may not be the best time to make dramatic changes to your mortgage situation.

source: everythingfinanceblog.com

Can You File for Mortgage Bankruptcy?

Have you fallen behind in your mortgage payment?  Do you worry about losing your house or creditors calling you?  If so, you are not alone.  Since 2008, many people have had to leave their homes because they could not keep up with the monthly payments and were eventually foreclosed on.  Thousands of homes sit empty because people bought homes with alternative mortgages such as 0% down or adjustable rate mortgages.

If you now find yourself unable to keep up with your mortgage payments, you have a few options.


 Can You File for Bankruptcy on Your Mortgage Alone?

If you are behind on your mortgage payment but not on the rest of your obligations, unfortunately, you cannot file for mortgage bankruptcy alone.  Likewise, if you are behind on your second mortgage but not your first, you can’t file for bankruptcy on just the second mortgage.



When you file for bankruptcy, you must include all of your debts.  Creditors can no longer contact you about repayment.  If you file for Chapter 7 bankruptcy, you will lose your home as it will be liquidated to help cover your debts.  If you can afford to make payments on your debts, a far better choice is to file for Chapter 13 bankruptcy as your home and retirement, among other assets, will be yours to keep.

What Other Alternatives Are There to Filing Bankruptcy?

If you only want to file bankrupcty due to your mortgage, you have a few other options available instead of filing bankruptcy.

1.  Apply for a mortgage modification.  Many, many Americans have been able to keep and stay in their homes over the last several years thanks to loan modifications.  You can apply for a loan modification whether you are current in payments, behind, in foreclosure or filing for bankruptcy.  The bank often prefers to work with you on a mortgage modification so that they can get their money.  Foreclosing on your property also costs the bank money and time that they would rather not spend.

2.  See if you have enough equity in your first mortgage to become current on your second.  If you are current on your first mortgage but behind on your second mortgage, you can see if you have enough equity in the home to refinance.  You can then take the money from the first mortgage to help you become current with your second mortgage.

3.  Stop making payments temporarily.  If you simply need some breathing room financially, you can stop making payments temporarily.  The bank will eventually begin the foreclosure process, but in some states, when you make another payment, the foreclosure process has to start all over again from the beginning.  Of course, this is not the ideal way to go.  Some people believe this is unethical, and you do run the risk of losing your home.

If you are behind on your mortgage and considering filing bankruptcy, remember that there are other alternatives before you take such a drastic step as filing for Chapter 13 or 7 bankruptcy.  Often the best choice is to contact the bank, explain your situation and see if they will be willing to work with you.

source: everythingfinanceblog.com

File Bankruptcy to Get Off Mortgage With Ex?

Dear Bankruptcy Adviser,

My ex-husband and I divorced in 2005 and he kept the house. The problem is that we agreed to everything but didn't specify that he must get my name off the house in the divorce papers. So we both have remarried and he has been late on the house payments, which is affecting my credit and preventing me and my husband from getting a home loan. My ex-husband is missing payments. He does get caught up, but this has occurred on and off. It also means he cannot refinance because his credit is poor and now mine is, too. So my question is: Could I file bankruptcy and list only the house so that I am no longer responsible for it? Also, if I did file, would that affect me being able to get a loan for a house?

-- Kathy

Dear Kathy, Most things in life are not as simple as we want them to be. I respect that you just want to be done with the ex-husband and the past. Your approach may work, but not as easily as you would like it to.

If you are eligible for the Chapter 7 bankruptcy, it would eliminate your liability on the mortgage but it would not remove your name from the property title or the mortgage loan. You may have signed your name off of the title during the divorce, but your ex-husband would have to refinance the mortgage to take your name off the loan.

Here are the issues you have to address.

Are you eligible for Chapter 7 bankruptcy? You did remarry. While you can file bankruptcy as an individual, you must qualify as a couple. Your new husband may have separate assets and those generally do not need to be listed in your bankruptcy. However, his income and any post-marriage assets must be listed in your case. So, you need to find out whether you are eligible for Chapter 7 bankruptcy.

Do you have joint accounts with your new husband? The bankruptcy will impact any joint credit card accounts that you have with your husband. He can keep paying and his credit should not be harmed, but the lender may place a notation on his credit report. That note will say, "Included in bankruptcy." I am not a credit reporting expert, but I have researched this issue and my research shows that this note should not impact his credit score. It may only require an explanation to future prospective lenders.

Know that all debt must be included. You cannot file bankruptcy only on some debt. You have to include all other accounts, such as credit cards or personal loans. Even accounts without balances will likely be closed. You can start over, but not with your current accounts.

What will happen to your mortgage with your ex-husband? The mortgage lender will receive notification that you have filed bankruptcy. The positive part is that future late payments will no longer report to the credit bureaus.

The negative part is that a future foreclosure will show up on your credit report. Your ex-husband may lose the house in foreclosure one, two or many years later. The lender would not have been reporting the late payments on your credit report all that time, but will report the foreclosure. That will definitely impact your credit.

Will you be able to get future mortgage loans? The bankruptcy will impact your credit for the next few years. Even though the bankruptcy notation stays on your credit for 10 years, you can get new credit sooner. Obtaining credit after bankruptcy is not impossible and your new husband could help you establish new, post-bankruptcy credit. Even though I do not endorse co-signing, it is a way for your current husband to help rebuild your credit faster.

You cannot expect to get a mortgage loan immediately after filing. Lenders want to see that you have established post-bankruptcy credit and confirm the bankruptcy case was filed more than two years ago.

As I said, this is an option, but most things are not as easy as we would like them to be. You will have to do some research and may need to talk to a bankruptcy attorney before you take this approach.

source: foxbusiness.com

How to Determine How Much to Give

 Dear Dave,

We’re debt-free except for our house, and that’s on a 15-year, fixed-rate mortgage. We also have an emergency fund in place. We’d like to give back this year, and do some Secret Santa things and a little extra giving. At what point should we start giving over and above what we tithe?

-Jeremy




Dear Jeremy,

My advice would be to wait until you finish Baby Step 3, which it sounds like you’ve done. That way, you’ve paid off all of your debt, except the house, plus you have a fully-funded emergency fund of three to six months of expenses.

You mentioned tithing, so I’ll cite the Scripture that says he who doesn’t take care of his family is worse than an unbeliever. I’m paraphrasing, of course, but in my mind, from a financial point of view, taking care of your family means having your emergency fund in place and being out of debt, except for your house. At that stage, you’re beginning to build wealth and you can really help others while knowing those closest to you aren’t going without.

My wife and I made the decision a long time ago to live on a certain amount of money. We apply a formula to everything above that figure for tithing and taxes. The rest we allocate for giving, saving and spending. It works great for us, but be responsible and realistic with what you have. You don’t want one of those areas to hinder the others.

-Dave

Dear Dave,

Do you have any advice for deciding which charities to give money to during the holidays?

-Danny

Dear Danny,

There are so many great organizations out there. It’s virtually impossible to pick three or four and say with any certainty they’re the best.

When it comes to choosing, I think the amount of diligence you put into the decision-making process should correspond directly to the amount of money you’re giving. There’s no reason to spend hours in exhaustive study over a $20 donation. However, you’d want to put some time and thought into research if the amount is $2,000.

In situations like this, I’d want to see full disclosure. I’d like to know the expense ratios of the organization and how much money goes toward administrative costs. Every organization has bills to pay and salaries to consider, but you don’t want overhead to eat up 90 percent of every dollar donated.

Helping a good cause is wonderful, but you’ve got to be reasonable and wise about these things. Don’t feel bad about asking to visit a site and take a tour. Lots of times you can get a feel for what’s going on by just walking around and gauging the people you encounter. Regardless, the bigger the gift, the more time you should spend investigating!

—Dave

source: foxbusiness.com

Buy a Home You Can Afford With the Mortgage Suitcase Trick

Raise your hand if you’ve ever tried to stuff more than you really need into a suitcase. You begin with good intentions, wanting to make sure you have everything you need for your trip. You don’t really know if you’re going to need that extra sweatshirt, but you throw it in just in case. Before you know it you’re sitting on the lid of your overflowing suitcase just to get it closed. Although you’re finally able to zip it up, the real bummer is that you have to drag around that heavy suitcase your whole trip.

Unfortunately, this scenario of trying to stuff in more than you really need isn’t just limited to packing your bags. When buying a home, it’s easy to convince ourselves to buy more than we need even though it stretches our budget. As a result we end up dragging around tens of thousands of extra mortgage debt for the life of our 15-30 year loan.

The mortgage suitcase trick is simple and can help you avoid buying too much home. Picture your housing budget as a suitcase. Every time you think about adding another feature or upgrade during your home buying decision, ask yourself if you really want to lug around the cost of that feature for the next 15-30 years.

While the mental image of a heavy suitcase busting at the seams can be an overspending deterrent, I know sometimes it helps to have more concrete guidelines. So here are four tips that can help you avoid overloading your mortgage suitcase. (See also: Quiz: Am I Really Ready to Buy a Home?)

1. Know Your Limits

Before you even start looking at homes figure out how much house you can afford. Just because you’re pre-approved for a certain amount doesn’t mean you have to spend that much or that you can really afford it.

It helps to run through some “what-if” scenarios to future-test the limit you decide on. What if one person decides they want to stay at home with the kids? What if you lose your job for six months? Whether you’re looking at a 15 or 30 year loan, a lot can change in your life during that time, so try to take that into account.

2. Define Your Priorities

There are many different factors that come into play when you’re trying to find the right place to live. Chances are you’re not going to be able to get everything you want in a home, so it helps to prioritize what is most important to you.

This list will come in really handy when you’re comparing multiple properties and having a tough time choosing which you want and how much money to offer the owner.



3. Don’t Shop Up

My wife likes to watch these house-hunter shows that start with the potential buyer listing off everything they’re looking for and what they want to spend. Many times the real estate agent will tell them they can’t get everything they want at the price they’ve set and will proceed to show them more expensive homes.

Once you see the home that meets all your criteria, you’re going to want it. However, if you can’t afford it then, you’re just making yourself unhappy by looking at it. Two unfortunate scenarios often result from shopping up:

1. Your emotions overcome logic, and you’ll break your budget to buy the home.
2. You don’t buy it but “settle” for less and are unhappy with the home you buy.

4. Beware Payment Justification

When you’re going through the process of buying a home, most everyone involved will be happy to tell you that a more expensive property “only raises your monthly payment by a little.” Your realtor wants you to buy. Your bank is probably happy to lend you more. Sometimes your spouse/partner/friend will even jump on board and argue the case that another $20-30K doesn’t raise your payments that much.

If you’ve done steps #1 and #2, then you’ll know what you can afford and what’s important to you. Don’t let other people talk you into spending more than you’re comfortable with. You’re the one who has to get out of bed and go into work every day for the next 20 years to pay off the mortgage.

source: wisebread.com

Does Your Credit Score Matter If You Don’t Do Debt?

A long time ago I told my friend Brad from EnemyofDebt.com that not paying attention to your credit score is dumb. I refused to listen to him on all his thousand and one reasons why he could care less, and I thought the fact he said he had a score of “0″ (yes, ZERO) was cockamamy. I’m pretty sure I told him it wasn’t even possible, which I later came to find out was kinda sorta untrue (it’s possible to have no credit score, which in essence is kinda like a “0,” even though it’s not).

Here we are though, 3 years later and much wiser in my age, and I’m starting to come around to the idea a bit more :) Not that I’m sold completely on the whole thing – I’m not, and I’ll totally continue to monitor my own ‘cuz I think it’s smart – but I do see where Mr. Brad is coming from more now. His stance can be simply summed up like this:

If you’re never taking out a loan again, why does your score matter?

An interesting take on the whole score game for sure. Especially if you’ve never really thought about it before. Why DOES your score matter if you don’t  have any loans or credit to your name at all? Is your CASH worth less depending on what your score reads? It’s a cool way to think of things mainly because it’s so drastic. When was the last time you decided to never have a loan or credit card?? Haha… for me it’s probably been a good 25 years, like when I was 7 ;)

And just like I thought 3 years ago when first debating against Brad, some of the same questions remain for those who believe it’s just not that possible:

1. How do you rent an apartment without a credit score?
2. How do you BUY a car without being able to take out a loan??
3. How do you get A HOUSE without taking out a mortgage?? Or mortgageS?

All common occurrences in our lives which we’re just so used to these days – something Brad says is part of the problem: Society has deemed taking on credit and loans as perfectly normal, so people rarely stop to consider the alternatives anymore! Nonetheless the consequences.

But what about those questions up there? What do people like Brad (aka the anti-debtors) say about ‘em? I picked apart an email he had shot me a couple weeks ago where he was doing a Q&A with one of his readers (I had told him if he didn’t put it on his blog  I was going to! Haha…), and he answers all 3 of those questions as he is always known to do: with passion and vigor :)

Renting an apartment without a credit score:

“You can definitely rent an apartment without a credit score. You can check out a service called eCredable.com that allows you to build a payment history to show landlords that you are financially reliable. It allows you to track your payments for utilities, rent, etc. It is a great resource! It’s also great to have an emergency fund savings statement showing how much you have saved up.

If you have no debt, can prove you are reliable, and can show you have savings, most landlords would be glad to have you. As a former landlord myself I know for a fact that a credit score really isn’t a reliable indicator as to how good of a tenant someone will be — financially or otherwise.”

Buying a car without a credit score:

“Buying a car is certainly possible without a credit score, assuming you are planning to buy one without going into debt. Having a car payment is one of the worst ways to own a car. You do not need a car payment to own a car as long as you buy a gently used 2-3 year old car that has had one owner who took care of it and can prove it. I do not recommend getting a car using debt — EVER — therefore your credit score doesn’t really matter when buying a car.”

AKA if you’re paying all *cash* for something, your credit doesn’t even become an issue. And I’d even tack on here that you could get a car for CHEAPER too if you presented the “all cash” option during your initial negotiations! Whether you buy it from a dealer, or from an individual. Here’s a good article Lance did for us the other month on paying cash for a car vs. taking out a loan, for what it’s worth. Even though it’s def. PRO-loanage ;)

Buying a home without a credit score:

“If you’re looking to get a house via mortgage one day, then you can do so without a credit score. It’s not as popular as other routes because society is so attached to their credit scores. It’s called “manual underwriting” and there are places that will take your real life information (renting receipts, eCredable reports, credit history (different than credit score), savings, income, and how much debt you have to evaluate your ability to pay a mortgage. (15-year fixed rate) My wife and I are paying cash for our next house so we don’t even need that.”

While pretty extreme, you can see it IS possible to function in this world without worrying about your credit and/or credit score. It mainly becomes an issue whenever you need to take out that loan or get approved for something/etc. (And maybe when you’re looking to get employment too as many companies now check out your credit too, whether you believe it’s right or wrong). If you have no plans on ever doing it though, why should it matter if you can get an excellent interest rate or not?

Brad ends his email to his reader like this:

“Chasing a credit score is a slippery slope and many experts still believe that it’s the only way to function in today’s day and age. It’s not true though and there are plenty of people living debt free without a single worry or care about their credit scores. It’s just a matter of how much you really want to be, stay, and live debt free. You don’t have to play the credit score game. The choice is yours…”

Interesting stuff to think about either way. Could I do it? No way. I enjoy taking advantage of my credit cards and loans to better leverage my money and (more importantly) my TIME, and I also like trying to compete for the best score too ;) As possible as the non-credit lifestyle may be for some, it’s just not that practical in my world. And I’m totally okay with that as long as things keep pushing forward and I don’t make any stupid mistakes ;) I’ll gladly take on a car loan if I can do something better with my cash instead, and I def. don’t want to wait 100 years to save up enough to buy a house cash-free either! Haha… Though I’ll gladly give Brad mad respect for doing so as it takes a LOT more restraint and patience that I’ll ever have, that’s for sure.

At the end of the day, though, I choose practicality and convenience over extremism. ‘Cuz I know myself well, and I’m confident I won’t get into much trouble using credit towards my advantage.  If you DON’T trust yourself though, or you SUCK at managing debt/credit cards/etc, by all means stay away!!  Maybe give Brad’s take some serious thought and slow things down a bit? There’s nothing wrong with choosing either side here as long as it’s the right one for YOU. So definitely consider your own habits when reading info about this stuff online, or wherever. You personality matters a LOT here.

Thoughts? Questions? Concerns? I’ll try and get Brad to watch this thread in case anyone wants to throw some zingers his way and/or give him props ;) He’s one of my best blogging friends I have, and I know he appreciates a good debate! So let’s see what you’ve got.

source: budgetsaresexy.com

International Mortgage Trends

In our modern, global and egalitarian society, home ownership is accepted as the main way families build wealth.

It is also one of the main metrics by which to measure the “health” of an economy.

Because so much economic activity (and inactivity, if you ask the Supreme Court) depends on personal attitudes and sentiments, it is useful to examine the opinions of home owners and aspiring homeowners. The Genworth International Mortgage Trends Report for 2011 shows some interesting behaviors in the countries they surveyed: Australia, Canada, UK, Ireland, USA, India, Mexico, Italy.

The report revealed:

    Two in three American respondents believe it is a good time to buy a home
   
   The average age of first time homebuyers in the US has increased since the 1970s (27.3) to
    the 00s    (31.6).

    In the United States, 40% of respondents use half or more of their income servicing debt.

    28% of American respondents overpay their mortgage.

    Canadian respondents are generally more comfortable with mortgage debt

    The more impoverished countries (Mexico and India) had respondents that had lower debt
     to income ratios and less tolerance for borrowing more than eighty percent of a home’s value.



If you read the news lately it would seem like the US housing market is on the rebound, with new housing starts flirting with levels not seen in a few years, which shows how we have progressed since the 2011 international mortgage trends report was researched.

Mortgage rates are low and prices are generally low in the US.

Where I live, the market has been flat for the last three years, but that’s much better than a down market,. We are fortunate to have equity in our home, but I feel bad for those who are underwater.

Across the board buyers are starting to stir and take advantage of the lowered cost of home ownership. For a while much of the activity was wealthy people or investors buying second and third properties, becoming wealthier while the majority tried to scrape their jaws off their 401k statements.

That is the point we strive to reach when we practice the art of personal finance.

When the market is down, the person who is debt free is capitalizing, buying assets, taking advantage of lower share prices. Down markets represent opportunities instead of worries. Housing crashes become clearance sales.

Decisions start to come without emotion, based on research and planning instead of stumbling and reacting.

Success comes from learning the wants, needs and beliefs of the majority of people. This will bring rewards even when the business cycle does its little shimmy.

source: marriedwithdebt.com

Foreclosure Settlement Funds Diverted in Some States

(TheNicheReport) — When several state attorney generals and the U.S. Justice Department sat down with legal representatives from the leading five mortgage lenders earlier this year, an unprecedented agreement was reached. In lieu of accepting wrongdoing over allegations of questionable foreclosure practices, the banks agreed to pay states $2.5 billion in different foreclosure prevention measures such as mediation, counseling and legal assistance.

A new report by a non-profit organization dedicated to monitoring the performance of the settlement revealed that some states have used these funds for purposes other than those originally intended. According to the report by Enterprise Community Partners, $989 million have been diverted to cover shortfalls on state budgets.

Disagreements Over the Use of Funds

Almost $2 billion of the settlement funds have already been earmarked by different states, and a little over half of the funds will be used for general budget expenditures instead of foreclosure prevention and alleviation programs. The $588 million left to allocate will go to Florida and Texas.

Virtually every state in the Union will benefit from the National Mortgage Foreclosure Settlement Agreement, but only 14 states have announced their intentions of using the funds for their original purpose. The states of California and Florida, two of the most affected by the foreclosure crisis that started in 2007, have been the most contentious in this regard.

In California, a state notorious for its deficit, Governor Jerry Brown ordered $410 million from the settlement to be used for purposes other than helping mortgage borrowers on the brink of foreclosure -a measure that the State Attorney General is opposed to. A similar situation is playing out in Florida, where the Attorney General wants to have the final say on how the funds are used, but legislators do not agree.

South Carolina received $31 million in settlement funds, but legislators wanted to use the money to stimulate business activity in the state. A veto by the Governor resulted in a compromise of $10 million being diverted. An Arizona consumer group filed a lawsuit against lawmakers who wanted to divert $50 million to prop up the state budget.

Compliant States

Some states, like Connecticut, are already using most of the funds received towards foreclosure relief programs. Other states like Ohio and Tennessee are administering the settlement money in the way they are supposed to: Managing programs designed to keep people in their homes.

source: thenichereport.com