AOL Real Estate - Blog http://realestate.aol.com/blog AOL Real Estate - Blog http://realestate.aol.com/blog/media/feedlogo.gif AOL Real Estate - Blog http://realestate.aol.com/blog en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/Mortgage Points: When It's Smart to Pay More Upfronthttp://realestate.aol.com/blog/2012/05/16/mortgage-points-pay-more-upfront-to-lower-your-interest-rate/http://realestate.aol.com/blog/2012/05/16/mortgage-points-pay-more-upfront-to-lower-your-interest-rate/http://realestate.aol.com/blog/2012/05/16/mortgage-points-pay-more-upfront-to-lower-your-interest-rate/#commentsFiled under: , ,

Mortgage points
Pay more now for a chance to save much more later? That's the idea behind paying "points" on a mortgage loan. But it doesn't necessarily make sense for every homeowner.

Mortgage points provide an opportunity for borrowers to lower their monthly mortgage payments by paying a lump sum at a loan's closing in exchange for a lower mortgage interest rate over the course of a loan.

Mortgage points are a smart option for borrowers who plan to stay in the same mortgage and not refinance for a relatively long period of time. But points are not recommended for borrowers who are likely to relocate or refinance in the not-so-distant future.

Borrowers pay points in order to lower their mortgage interest rates by a certain amount. The cost of one point is equal to one percent of the mortgage amount. In the case of a 30-year fixed-rate mortgage, paying one point will typically lower your interest rate by somewhere around one eighth of a percent, according to Tim Dwyer, chief executive officer of Entitle Direct, a title insurance company.

So if borrower A paid one point on a $200,000 mortgage with what would have been a 4 percent interest rate, she would lower her interest rate to 3.875 percent (4 percent -- 1/8th percent) for the cost of $2,000.

A good way of looking at points is to view them as an investment that "yields a return for the longer you stay in your house," mortgage expert Jack Guttentag writes.

If Borrower A stays in the same mortgage for only a few years before selling her home or refinancing, she may end up not saving enough in monthly payments to justify paying the $2,000 upfront. But if she stays in the mortgage for a longer period of time, she eventually breaks even on her investment and enjoys saving money every month from there on out.

"If the points are reasonable, I want to pay that upfront and enjoy the interest rate savings over 10 years because I know I'm not going to refinance," Dwyer says. But if "you're a young couple" and "you know you're going to have more babies, you know you're going to be moving out," then you should avoid paying points.

Banks may offer 10 or more point combinations on any given loan, Guttentag writes, and borrowers often don't end up selecting the option that aligns most with their interests, simply out of ignorance. You can use a point calculator to find out how long it would take to break even using different point combinations.

In a perfect world, borrowers would pay points only if it benefited them in the long run. But, in fact, many borrowers pay points out of necessity. Why?

Lenders will only allow borrowers' monthly mortgage payments to equal up to a certain percentage of their monthly income. Often they will only approve loans for borrowers whose monthly mortgage payments would not exceed 28 percent of a borrower's monthly income.

Paying points allows a borrower who otherwise wouldn't qualify for a loan because of income limitations to lower his or her monthly payment to the extent that the bank is willing to make the loan.

Some banks offer "negative points," a rebate paid by lenders toward a borrower's closing costs. "Negative points" lower closing costs for a mortgage, but raise its monthly interest rate. They can be a good option for borrowers who are hard-pressed to cover closing costs with zero points or who intend on moving or refinancing in a few years.

Follow Teke Wiggin on Twitter (@tkwiggin), follow @AOLRealEstate, or connect with AOL Real Estate on Facebook.

What Are Mortgage Points

See also:
Mortgage Jargon in Simple Terms
Real Estate Terms and What They Mean
Don't Be Surprised by Expenses of Homeownship

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]]>closing costsmortgage pointsmortgage points closing costsnegative mortgage pointsnegative pointspointswhat are mortgage pointsTeke Wiggin2012-05-16T13:30:00+00:00Consumer Bureau Targets Predatory Lendinghttp://realestate.aol.com/blog/2012/05/10/consumer-bureau-targets-predatory-lending/http://realestate.aol.com/blog/2012/05/10/consumer-bureau-targets-predatory-lending/http://realestate.aol.com/blog/2012/05/10/consumer-bureau-targets-predatory-lending/#commentsFiled under: ,

Consumer Protection Bureau predatory lendingBy James O'Toole

The federal government is considering a new set of rules on mortgage origination that it says would make the process simpler and more transparent for borrowers.

The Consumer Financial Protection Bureau, created as part of the Dodd-Frank financial reform law, said Wednesday that the new rules will focus on mortgage points and fees, the current complexity of which can make it difficult for homebuyers to assess different loan offers. The rules would also include new standards for officials in charge of mortgage origination.

"We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them," CFPB head Richard Cordray (pictured above) said in a statement.

Mortgage origination is thought to have played a key role in the housing crisis, as so-called "predatory lenders" steered borrowers into complicated loans that they couldn't afford, which later went bust in large numbers. Originators are a focus of the Obama administration's mortgage crime task force, announced in January.

Among other things, the rules under consideration would prohibit incentive payments to mortgage originators who steer customers into higher-priced loans, following on a similar rule issued by the Federal Reserve Board in 2010.

Origination officials, such as mortgage brokers and loan officers, would be required under the new rules to go through training and undergo background checks. Origination charges that vary with the size of a borrower's loan would be banned.

The rules will likely be proposed formally this summer before being finalized in January of next year, the CFPB said.

Last month, the bureau outlined a set of new rules under consideration for mortgage servicers. These regulations would require clearer mortgage statements for borrowers and better disclosures about any fees or changes in a loan's interest rate.

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Now on Sale at Costco: Mortgages
Buying a Home Won't Get Much Cheaper

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Fed Financial Protection Bureau Investigates Overdraft Fees

 

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]]>consumer bureauDodd-Frank ActDodd–Frank Wall Street Reform and Consumer Protection ActFinancenew mortgage rulespredatory lendingpredatory lending practicesPresidency of Barack ObamaRichard CordrayCNNMoney2012-05-10T15:35:00+00:00Mortgage Rates Hit Another Record Lowhttp://realestate.aol.com/blog/2012/05/03/mortgage-rates-hit-another-record-low/http://realestate.aol.com/blog/2012/05/03/mortgage-rates-hit-another-record-low/http://realestate.aol.com/blog/2012/05/03/mortgage-rates-hit-another-record-low/#commentsFiled under: ,

By Martin Crutsinger

WASHINGTON -- Average U.S. rates for 30-year and 15-year fixed mortgages fell to fresh record lows this week, offering more incentive for Americans to buy or refinance homes.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan fell to 3.84 percent, the lowest since long-term mortgages began in the 1950s. That's below the previous record rate of 3.87 percent reached in February.

The 15-year mortgage, a popular option for refinancing, dropped to 3.07 percent, also a record. The previous record of 3.11 percent was hit three weeks ago.

Cheaper mortgage rates haven't done much to boost home sales. Rates have been below 4 percent for all but one week since early December. Yet sales of both previously occupied homes and new homes fell in March.

Analysts suspect some of that weakness reflected a warm winter, which pulled sales that would normally occur during the spring buying season into January and February.

Still, many potential buyers can't qualify for loans or afford higher down payments required by banks. Home prices in many cities continue to fall, making those that can afford to buy uneasy about entering the market. And many who can afford to buy or refinance have already taken advantage of lower rates.

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Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note. Mixed news on the U.S. economy and Europe's debt crisis have led investors to buy more Treasurys, which are considered safe investments. As demand for Treasurys increases, the yield falls.

To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average rage does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.8 last week, up from 0.7 the previous week. The fee on 15-year loans was 0.7, the same as last week.

The average on one-year adjustable rate loans also dropped to a record low of 2.7 percent last week, down from 2.74 percent last week. The fee on one-year adjustable rate mortgages was 0.6, unchanged from last week.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

See also:
Home Sales See Best 1st Quarter in 5 Years, Realtors Report
Buying a Home Won't Get Much Cheaper
Avoiding Foreclosure: More and Better Options Available Now

To Buy or Not to Buy a Home Now

 

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]]>15 year fixed rate mortgage30 year fixed rate mortgagehome financinghome loansmortgage ratesrecord home loansrecord low interest ratesrecord low mortgage ratesThe Associated Press2012-05-03T14:50:00+00:006 Ways to Get a Great Mortgage Dealhttp://realestate.aol.com/blog/2012/04/30/6-ways-to-get-a-great-mortgage-deal/http://realestate.aol.com/blog/2012/04/30/6-ways-to-get-a-great-mortgage-deal/http://realestate.aol.com/blog/2012/04/30/6-ways-to-get-a-great-mortgage-deal/#commentsFiled under: , ,

mortgage great dealBy Ismat Sarah Mangla,
Money Magazine

Finding an affordable house is no longer a problem but qualifying for a mortgage can be. Here are six tips to getting a mortgage and a good rate.

1. Put your credit on ice.

The higher your credit score, the lower your rate: The best rates go to those with a 760 or more, says credit-score expert John Ulzheimer.

So keep that plastic in your wallet (and don't apply for new cards or other loans) for at least three months before you go loan shopping. One large balance -- even if it's paid off at the end of the month -- can ding your score by 20 points or more.

2. Ask for time.

Most sales contracts give you only 10 days to nab a loan or the seller can move on. Negotiate for an additional five to 10 days to give you some room to shop around.

3. Get at least six quotes.

Rates on a 30-year fixed conforming loan can vary at least as much as a quarter of a percentage point. Get quotes from national lenders at mortgagemarvel.com and find out what your local credit union or regional bank is offering as well. Inquire about fees; while lenders aren't required to give you a good-faith estimate of closing costs (which average 2 percent of the loan balance) until you actually apply, some will provide it if you ask.

4. Match the lock period to the loan.

You now need 60 days or more to close a loan, says Wharton professor and mortgage expert Jack Guttentag of mtgprofessor.com, and getting an extension on a lock will cost at least a couple of hundred dollars. Ask your lender how long it's taking to close loans like yours -- and don't lock for less.

Understanding Adjustable Rate Mortgages



















5. Opt for an ARM.

If you know you're not going to be in a house for more than seven years, adjustable-rate mortgages can mean big savings, says Guttentag. The monthly payment on a $300,000, seven-year ARM at the recent rate of 3.23 percent is $1,302, vs. $1,455 for a 30-year fixed at 4.13 percent.

6. Talk to a broker.

Those who need a jumbo loan or have an unusual situation (say, you're self-employed) will get the best deal from a mortgage broker who has access to and experience with a lot of lenders. Find a fee-only one at upfrontmortgagebrokers.org.

Read more on CNNMoney:
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]]>credit home mortgagegetting a mortgage dealJack Guttentagmortgage advicemortgage great dealshopping for mortgagetips getting mortgageCNNMoney2012-04-30T13:30:00+00:00Now on Sale at Costco: Mortgageshttp://realestate.aol.com/blog/2012/04/26/now-on-sale-at-costco-mortgages/http://realestate.aol.com/blog/2012/04/26/now-on-sale-at-costco-mortgages/http://realestate.aol.com/blog/2012/04/26/now-on-sale-at-costco-mortgages/#commentsFiled under: ,

By Les Christie @CNNMoney

NEW YORK -- Not only can Costco shoppers find bulk-packs of chicken wings, 24-rolls of toilet paper and large-screen TVs at a discount, they can now land themselves a mortgage.

After a year of testing, Costco is rolling out a full-service mortgage lending program on its website in partnership with First Choice Bank, a New Jersey-based community bank, and 10 other lenders.

Costco's partners have issued more than 10,000 mortgages to members under the program. But Lauren Kutschka, Costco's manager of financial services, expects that number to swell as the warehouse retailer markets the service more aggressively to millions of members in its stores and in its weekly publication Connection.

"I went in to buy some bottled water, big bags of chips, cereal and some Nutri-Grain bars that I eat on my route," said Ray Sheets, a FedEx courier from Canton, Ga. "I saw a home loan brochure on my way out and picked it up."

Sheets went onto Costco's site, put in his information and quickly accessed offers from four lenders. The rates, closing costs and terms were listed up front. And the closing costs -- of about $2,500 -- were about a third of what he would have had to pay through other lenders, he said.

Within a few weeks, Sheets refinanced his $170,000, 15-year fixed mortgage carrying a 4.25 percent rate into a 30-year loan with a rate of 4 percent. The move lowered his monthly payment by nearly $500 to $811 a month.

Mortgages are just one of several financial products available to Costco's members. The warehouse club also offers health and auto insurance, as well as stock brokerage services, said Kutschka.

"We've always known that our members wanted more financial services," she said. "Right now, we offer recreational vehicle and boat loans, and we're going to add auto loans to that. We're also looking to offer student loans."

Costco had started offering mortgages a couple of years ago, but the service provider it was using didn't share enough details about how it was dealing with Costco's members, said Kutschka. So Costco started over from scratch, partnering with First Choice Bank to build a new mortgage lending portal.

Much like LendingTree, the site gathers quotes from various lenders. However, there is one key difference. Under the Costco program, the borrower's identity is revealed only after they officially select the lender, said John Alexander, business development director at First Choice.

With many other lead-generation sites, the consumer fills out an application and any lender can make an offer and begin sending marketing communications to the applicant without restrictions.

Costco members will still need to do their homework and compare offers, though, said Keith Gumbinger of mortgage information company HSH.com. Even after a year of testing, Costco's service is still new.

First Choice said it will police the other lenders to ensure they comply with Costco's policies, which include giving accurate rates and terms, and following up quickly on questions and requests. The technology enables Costco to monitor individual applications and make sure that they are handled properly and expeditiously.

Costco takes no profit on the lending itself, but it does get paid to market the service.

In Sheets' case, his lender, Bank of the Internet, sent a representative -- an attorney -- to his home to close on the loan, he said. She answered all his questions and explained all of the legal terms in the contract.

"There were no surprises," he said.

Gumbinger said the service may prove better for people like Sheets, who are refinancing than those who are purchasing homes.

"The mortgage origination process is still a hands-on, face-to-face process," he said. "It involves a comfort level and you don't get that with an online service."

That may be true in the initial stages of the borrowing process, but once a Costco borrower has chosen a lender, the level of service steps up, as in Ray Sheets' case.

Given the size of Costco's footprint and its ability to squeeze great deals out of vendors, Costco members should at least "include the site in their search plan," said Gumbinger.

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]]>Bank of the Internet mortgageCostco financial servicesCostco mortgagesFirst Choice Bankmortgage shopping CostcoCNNMoney2012-04-26T13:30:00+00:00Consumer Watchdog Agency Eyes Discriminatory Lendinghttp://realestate.aol.com/blog/2012/04/19/consumer-watchdog-group-eyes-lending-discrimination/http://realestate.aol.com/blog/2012/04/19/consumer-watchdog-group-eyes-lending-discrimination/http://realestate.aol.com/blog/2012/04/19/consumer-watchdog-group-eyes-lending-discrimination/#commentsFiled under: ,

Lending discrimination

The Consumer Financial Protection Bureau has announced its intention to crack down on discrimination by lenders against women and minorities.

On Wednesday the agency -- a centerpiece of President Barack Obama's attempt to reform the nation's financial system -- sent a letter to lenders, which it called "Fair Notice on Fair Lending." In the letter, the CFPB explains that the Equal Credit Opportunity Act "makes it illegal for a creditor to discriminate against any applicant because of race, color, religion, national origin, sex, marital status, age [or] receipt of income from any public assistance program." Credit availability "often determines an individual's effective range of social choice and influences such basic life matters as selection of occupation and housing." Without discrimination-free access to credit, in other words, many consumers will be prevented from accessing housing on equal terms.

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The agency goes on to warn lenders of its plans to enforce existing regulations and to act against even those lending policies that may not be discriminatory in intent, but nonetheless have adverse effects on protected groups.

"It is important to recognize that this subtle but powerful form of discrimination creates damages that are no less direct than the kind of overt and blatant discrimination that, we hope and assume, is increasingly a relic of a bygone era," said CFPB Director Richard Cordray in a speech to the National Community Reinvestment Coalition, according to Reuters.

"Our economy is in the process of recovering from the worst financial crisis since the Great Depression," Cordray said. "We cannot afford to tolerate practices that either price out or cut off segments of the population -- such as women, the elderly, or communities of color -- from the credit markets."

See also:
Foreclosures Put 8 Million Children At Risk, Study Says
1st Gay-Friendly Public Housing Project Planned in Philadelphia
Fair Housing Group Sues U.S. Bank Over Foreclosures

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]]>Consumer Financial Protection BureauDirector Richard Cordraydiscriminatory lendingEqual Credit Opportunity Actfair housingfair lendingfair lending regulationsFair Notice on Fair Lendinghousing discriminationNational Community Reinvestment CoalitionredliningEamon Murphy2012-04-19T16:45:00+00:00How Obama's FHA Loan Plan Can Help You Refinancehttp://realestate.aol.com/blog/2012/03/07/how-obamas-fha-loan-plan-can-help-you-refinance/http://realestate.aol.com/blog/2012/03/07/how-obamas-fha-loan-plan-can-help-you-refinance/http://realestate.aol.com/blog/2012/03/07/how-obamas-fha-loan-plan-can-help-you-refinance/#commentsFiled under: , ,

Obama housingWASHINGTON -- The Obama administration is offering some relief to homeowners who have government-backed mortgages. Under a program President Barack Obama unveiled Tuesday, the government would cut the fees it charges to insure those borrowers.

The idea is that lower fees would persuade millions to refinance their loans while interest rates are near record lows. It's the administration's latest attempt to minimize the damage from the foreclosure crisis and help more people keep their homes.

Here's a look at the program:

Q: What has the administration proposed?

A: Borrowers with mortgages insured by the Federal Housing Administration could refinance at half the current fee. A lower fee would follow years of rising mortgage insurance premiums. FHA is also reducing an up-front premium when it initiates a loan. The FHA charges the fees on top of standard interest rates because it backs riskier borrowers.

Q: Who's eligible?

A: The administration estimates 2 million to 3 million homeowners. Most are first-time or low-income homebuyers. The FHA requires only a 3.5 percent down payment. And borrowers don't have to prove that they're employed. FHA borrowers can also refinance even if they're "underwater," or owe more on their mortgage than their home is worth.

Q: How much will those who get the reduced fees actually benefit?

A: The fee is now 1.15 percent of the mortgage balance each year. Those fees are unappealing to many borrowers who want to refinance. The plan would cut the fee to 0.55 percent. The current up-front premium would also be lowered, from 1 percent of the loan balance to .01 percent. As a result, a borrower who owed $175,000 on their mortgage could save about $1,750 in one-time fees and more than $1,000 per year in annual fees by refinancing. The borrower could save nearly $150 a month more if the interest rate declined from 5 percent to 4 percent.

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Q: Can those who are eligible be excluded from other government housing programs?

A: Most of the other federal housing programs, including its signature refinancing and mortgage modification programs, target other types of homeowners. So there's little overlap with the FHA's refinancing plan. For example, the administration's refinancing and mortgage modification programs are for homeowners whose mortgages are owned or backed by government-controlled Fannie Mae and Freddie Mac, not the FHA.

Q: Will it work?

A: Possibly, if the reduced fees are well-advertised and borrowers are confident of saving on their mortgage payments by refinancing. If homeowners are wary of paying even a small amount to refinance, the program could fail to reach millions who are eligible. Economists said the lower fees are a modest way to help the troubled housing market but won't turn it around. "The only thing that will do that are low interest rates and job growth," said Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School. Stan Humphries, chief economist at the real estate website Zillow.com, predicted that a separate plan to compensate military service members who were wrongfully foreclosed upon would be a big help to that group. It's unclear how many military service members would benefit.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

See also:
Barbara Corcoran on Refinancing Do's and Don'ts
Homeowners Association Forecloses on Vet for $340
Foreclosure Starts and Sales Spiked in January, Report Says

Obama Wants to Make Refinancing Easier

 

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]]>barack obamafha loansfha refinancingforeclosure crisishome loansloan refinancingmortgagesObama AdministrationObama housing planobama military foreclosuresobama mortgage feesobama mortgage refinancing planThe Associated Press2012-03-07T16:40:00+00:00Bank of America Accused of Discriminating Against Disabledhttp://realestate.aol.com/blog/2012/02/27/bank-of-america-accused-of-discriminating-against-disabled/http://realestate.aol.com/blog/2012/02/27/bank-of-america-accused-of-discriminating-against-disabled/http://realestate.aol.com/blog/2012/02/27/bank-of-america-accused-of-discriminating-against-disabled/#commentsFiled under: ,

WASHINGTON -- The U.S. Department of Housing and Urban Development charged Bank of America Corp. on Monday with discriminating against three disabled borrowers in Michigan and Wisconsin.

The nation's biggest bank is accused of violating the federal Fair Housing Act in 2009 and 2010. The act prohibits lenders from discriminating against disabled borrowers, among other provisions,

Bank of America imposed "unnecessary and burdensome requirements" on borrowers who relied on disability income to qualify for their home loans, the government said. The bank also required some disabled borrowers to provide statements from their doctors to get loans, according to the government.The cases involved individuals living in Oscoda and Lapeer, Mich., and Eau Claire, Wis.,

In a statement, Bank of America said it followed different but tougher Federal Housing Administration guidelines in all three cases and blamed "inconsistencies" in different laws regulating housing discrimination.

"There is no basis to allege that Bank of America has engaged in a systemic practice of discriminating on the basis of disability in connection with mortgage lending," the statement said.

The Justice Department is also reviewing the case.

HUD can impose sanctions of up to $65,000, but in cases brought by the Justice Department, civil penalties up to $100,000 may be imposed.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

Also see:
Black Borrowers Face Higher Hurdles in Lending, Study Shows
Bank of America Slams the Door on Fannie Mae

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]]>bank of america disabilitybank of america disabledbank of america disabled homeownersbank of america discriminationdisabled homeowners bank of americadiscrimination bank of americaThe Associated Press2012-02-27T17:17:00+00:00Black Borrowers Face Higher Hurdles in Lending, Study Showshttp://realestate.aol.com/blog/2012/02/24/black-borrowers-face-higher-hurdles-in-lending-study-shows/http://realestate.aol.com/blog/2012/02/24/black-borrowers-face-higher-hurdles-in-lending-study-shows/http://realestate.aol.com/blog/2012/02/24/black-borrowers-face-higher-hurdles-in-lending-study-shows/#commentsFiled under: ,

lender discriminationQualifying for a loan in today's tight credit market is hard. But add race to the mix, and a borrower's odds can go from bad to worse, a new report suggests.

In a study of loans created on Prosper.com, a peer-to-peer lending website where applicants are encouraged to include a personal photo, researchers found that black borrowers are 25 to 35 percent less likely to receive funding than a white borrower with similar credit.

The report, entitled "What's in a Picture? Evidence of Discrimination From Prosper.com," studied 110,000 loan applications from the popular lending website created between June 2006 and May 2007.

"By far the biggest factor was race," said Devin Pope, co-author and assistant professor at the University of Chicago Booth School of Business. Of the 110,000 loans studied, about 5,000 were home finance or repair related.

Part of the reason for the stark discrepancy, Pope told AOL Real Estate, is that the online lending market is less regulated than its brick and mortar counterpart, where discriminatory practices are more easily identified.

But that doesn't preclude racial discrimination from real-world borrowing entirely. In fact, a closer probe of mortgage lending practices during the housing run-up revealed that African-American and Latino borrowers were more frequently offered high-interest, sub-prime mortgages than their white counterparts, even when they qualified for better terms.

The investigation led to a historic settlement in which Bank of America agreed to pay $335 million to settle widespread claims of discriminatory lending at its Countrywide unit. The Department of Justice cited over 200,000 cases in which black and Latino borrowers were charged higher fees and interest rates without regard for their credit profile.
In 2006, at the height of risky home-loan servicing, 52 percent of loans to African American families were subprime; for Latino families, more than 40 percent were subprime, according to the Center for Responsible Lending, a consumer watchdog group. By the time the housing market rights itself, some 40 to 50 percent of subprime loans will have failed, said Kathleen Day, a spokesperson for the CRL.

Other Findings

While race was the largest factor in determining loan funding, the study also detected other biases on the peer-to-peer lending site. Older and overweight applicants were 5 to 10 percent less likely to get funding, while people who looked unhappy in their photos were 10 to 15 percent less likely to close on a deal. (Pope admits that the sample size for "unhappy" applicants was considerably smaller.)

Alternatively, female applicants were actually 10 to 15 percent more likely to receive funding for their projects.

UPDATE: While the data for the study was captured between June 2006 and May 2007, Prosper.com has overhauled its lending model since the survey was conducted, according to spokesperson Laurie Azzano. The platform now uses blind bidding, which no longer allows users to post personal photos, she said.

BofA in $335M Loan Discrimination Settlement


Also see:
Landlady's 'White Only' Sign Still Not OK, Commission Says
Confederate Flag Gets South Carolina Neighbors Up in Arms
WATCH: Ornery Neighbor Scaring Off Prospective Buyers?

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]]>black homeownersblack homeownershipdevin popediscriminatory lendinghispanic homeownerslatino homeownerslender discriminationmortgagesprosper.comStefanos Chen2012-02-24T13:48:00+00:00FHFA Plan for Government Lenders Could Hike Loan Costhttp://realestate.aol.com/blog/2012/02/22/fhfa-could-shrink-role-of-fannie-mae-and-freddie-mac/http://realestate.aol.com/blog/2012/02/22/fhfa-could-shrink-role-of-fannie-mae-and-freddie-mac/http://realestate.aol.com/blog/2012/02/22/fhfa-could-shrink-role-of-fannie-mae-and-freddie-mac/#commentsFiled under: ,

fannie mae freddie macWASHINGTON -- The government regulator for Fannie Mae and Freddie Mac has submitted a plan to Congress that would shrink the mortgage giants' roles in the housing market.

The Federal Housing Finance Agency's proposal for a leaner Fannie and Freddie was released Tuesday and would mean fewer mortgages are backed by the government. That could make buying a home more expensive because it would lead to higher interest rates.

Under the plan, Fannie and Freddie could also increase its prices to guarantee loans and establish agreements with private investors to take on added credit risk.

The Obama administration last year laid out three options to wind down the government's support for the mortgage market slowly. Rather than making a single recommendation, the administration left the decision to Congress.

Fannie and Freddie buy mortgage loans from primary lenders, pool them, and sell them with a guarantee that investors will be paid even if borrowers default. The agencies have helped people buy homes at affordable interest rates.

The Risk of Drastic Action

But the two nearly collapsed in 2008, after the subprime mortgage market collapsed and defaults and foreclosures piled up. The government seized them in September 2008.

The bailouts of Fannie and Freddie have so far cost taxpayers roughly $150 billion, and that figure continues to grow. Republicans have called for Fannie and Freddie to be abolished, and have largely blamed the two for leading the country into the 2008 financial crisis.

But there is a growing recognition that drastic action would upend the housing finance system, threatening the broader economy.

Since they were taken over by the government, Fannie and Freddie have bought or guaranteed about 3 out of every 4 mortgages in the United States and more than 10 million Americans have refinanced Fannie- and Freddie-backed mortgages.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

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Also see:
Home Affordability at Record High, Builders' Report Says
Bank Sold Your Loan? Mortgage Settlement May Deal You Out
Foreclosed Homeowners Get More Time to Request a Review

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]]>fannie maeFannie Mae Freddie Mac bailoutFederal Housing Finance Agencyfhfafreddie macGSEsThe Associated Press2012-02-22T10:05:00+00:0030-Year Mortgage Rate Falls to 9th Record Low in a Yearhttp://realestate.aol.com/blog/2012/02/03/30-year-mortgage-rate-falls-to-ninth-record-low-in-last-year/http://realestate.aol.com/blog/2012/02/03/30-year-mortgage-rate-falls-to-ninth-record-low-in-last-year/http://realestate.aol.com/blog/2012/02/03/30-year-mortgage-rate-falls-to-ninth-record-low-in-last-year/#commentsFiled under: , ,

mortgage ratesWASHINGTON -- The average rate on the 30-year-fixed mortgage fell this week to a record low, the ninth time that has happened in the last year. But even with the cheapest rates in history, the housing market remains depressed.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.87 percent this week. That is below the previous record of 3.88 hit two weeks ago.

The average on the 15-year fixed mortgage fell to 3.14 percent, also a record low. Records for mortgage rates date back to the 1950s.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.


Rates have been low for more than a year, and the average rate on the 30-year loan has hovered near 4 percent for more than three months. Yet few people can afford to buy a home or qualify for a loan. Many of those who can have already done so.

High unemployment and scant wage gains have made it harder for many others to qualify for loans. Still others don't want to sink money into a home that they fear could lose value over the next few years.

Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.

Builders are hopeful that the low rates could boost sales next year. But so far, they have had a minimal impact.

Mortgage applications have risen slightly over the past four weeks, according to the Mortgage Bankers Association. But they are coming off extremely low levels.

To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.

For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.85 percent. The average on the one-year adjustable loan rose to 2.76 percent from 2.74 percent.

The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable-rate loan was unchanged at 0.6.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.


How to Lock Your Mortgage Rate Before Lender Hikes It

Also see:
Open Houses of the Week: Super Bowl Weekend
Distressed Sales Undercut Home Prices in 2011, Study Says

 

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]]>30 year fixed mortgage30 year fixed rate mortgage30 year loan rateFreddie Maclow interest ratesMortgage Bankers Associationmortgage interest ratesmortgage ratesrecord low interest ratesThe Associated Press2012-02-03T11:50:00+00:00Freddie Mac Bet on Homeowners' Misery, Report Sayshttp://realestate.aol.com/blog/2012/01/30/freddie-mac-bet-on-homeowners-misery-report-says/http://realestate.aol.com/blog/2012/01/30/freddie-mac-bet-on-homeowners-misery-report-says/http://realestate.aol.com/blog/2012/01/30/freddie-mac-bet-on-homeowners-misery-report-says/#commentsFiled under: ,

freddie macFreddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.

Read the full story by ProPublica and NPR here.

Also see:
Freddie Mac Paid Gingrich Group $25,000 a Month States Mull $25 Billion Mortgage Settlement With Big Banks

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]]>Freddie Macfreddie mac bailoutFreddie Mac bet against homeownersFreddie Mac ProPublica reportfreddie mac refinancingAOL Real Estate Editors2012-01-30T11:25:00+00:00FHA Loans: What 3.5% Down Can Buy in This Housing Markethttp://realestate.aol.com/blog/2011/12/09/fha-loans-what-3-5-down-can-buy-in-this-housing-market/http://realestate.aol.com/blog/2011/12/09/fha-loans-what-3-5-down-can-buy-in-this-housing-market/http://realestate.aol.com/blog/2011/12/09/fha-loans-what-3-5-down-can-buy-in-this-housing-market/#commentsFiled under: , ,



In today's Scrooge-like lending market, many borrowers are under the impression that they simply don't have the balance sheets or resumes necessary to buy a home. But while it's true that banks now hold borrowers to much stricter income standards, many homeowners can still pull off a home purchase with a startlingly low down payment: Only 3.5 percent through the Federal Housing Administration. Meanwhile, typical down payments in today's market can range anywhere from 10 to 20 percent and beyond. (Learn more about mortgage types in this AOL Real Estate video.)

Just recently, Congress raised the ceiling on FHA loans in more than 600 of the costlier counties in America. After factoring in at least a 3.5 percent down payment, borrowers in these upper-limit cities can now now qualify for an FHA home purchase of around $750,000.

Looking at housing markets around the nation that include some of these pricier enclaves, like New York City, Los Angeles and San Jose, we've compiled a list of homes for sale that push the FHA to the limit. Click the gallery below to see just how much the FHA can do for you.

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]]>Congress FHA loan ceilingfederal home loansFederal Housing AdministrationFHA down paymentFHA loan limitFHA loansgovernment housing loanloan ceiling fhaNew loan limitsTeke Wiggin2011-12-09T19:49:00+00:00Mortgage Delinquency to Drop Sharply in 2012, Report Sayshttp://realestate.aol.com/blog/2011/12/07/mortgage-delinquency-to-drop-sharply-in-2012-report-says/http://realestate.aol.com/blog/2011/12/07/mortgage-delinquency-to-drop-sharply-in-2012-report-says/http://realestate.aol.com/blog/2011/12/07/mortgage-delinquency-to-drop-sharply-in-2012-report-says/#commentsFiled under: , ,

mortgage delinquencyNEW YORK -- If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion.

Mortgage delinquency rates -- the ratio of borrowers 60 or more days behind on their payments -- will likely tick up to about 6 percent through the first three months of 2012, TransUnion said in its annual delinquency forecast issued Wednesday.

But by the end of next year, it could drop to 5 percent, TransUnion said. That's well off the peak of 6.89 percent seen in the fourth quarter of 2009.

Chicago-based TransUnion's forecast takes into consideration several factors, including expectations that consumer confidence and the economy will improve next year.

Also, banks are expected to get a good portion of pending foreclosures off their books next year, said Charlie Wise, TransUnion director of research and consulting.

Slowed by Foreclosures

Banks are still working through a backlog of foreclosures created by issues including the robo-signing scandal, in which bank officials signed mortgage documents without verifying the information they contained. The issue surfaced last year in areas with large numbers of foreclosures, and banks had to backtrack and review foreclosures across the country to make sure their paperwork was in order.

That slowed down the process, Wise said, and left mortgages listed as delinquent for longer than they otherwise might have been, temporarily boosting delinquency rates.

Economic uncertainty has also contributed. In the third quarter of 2011, mortgage delinquencies saw their first uptick in six quarters, largely fueled by concerns over the economy as lawmakers were debating the U.S. debt ceiling and Europe's debt crisis was unfolding.

Helping to cut the mortgage delinquency rate are a slowly improving job market and a stabilizing housing market.

While the drop will be significant, the rate will remain well above the pre-recession average of 1.5 to 2 percent.

"We have a long way to go to get back," said Steven Chaouki, a TransUnion vice president.

The situation with credit cards is much stronger. Card delinquencies -- payments late by 90 days or more -- dropped to their lowest levels in 17 years during the spring, then saw a slight increase in the third quarter, but still remained near historic lows.

TransUnion expects further edging up in the current quarter and the first three months of 2012, but then late payments on bank-issued cards should fall again.

Credit Still Tight

One reason card delinquencies are expected to remain so low is that credit is much tighter than it was before the recession. TransUnion data showed that nearly a quarter million new card accounts were opened by people with less-than-stellar credit scores during the third quarter, which contributed to the slight increase in late payments during the summer months. But banks are mainly still going after consumers with top-tier credit histories.

"Lenders are willing to lend, but are still pursuing the best customers," said Chaouki.

TransUnion predicts by the end of 2012, just 0.69 percent of cards will be considered delinquent, down from a predicted 0.74 percent in the current quarter. The rate has wobbled in the last few years, peaking at 1.36 percent in the fourth quarter of 2007, then dropping and bouncing back up to 1.32 percent in the first quarter of 2009.

The figures reflect a shift in which debt payments consumers consider most important, largely because home prices fell so far.

Chaouki said the conventional wisdom before the Great Recession was that homeowners would put their mortgages first because of concern about their reputation and the emotional attachment involved in owning a home. But what has become clear as housing prices have continued to fall, he said, is that bill payment is far more practical.

"People were protecting their home equity," he said. Credit cards were relatively easy to come by in years past, he said, so when money got tight, it was an easy decision to default on cards and maintain house payments. Now it's common to owe more on a mortgage than a house is actually worth, but credit cards are harder to get. So consumers are being practical and protecting what is more valuable to them.

He said he expects the equation will shift again if housing prices rebound and people go back to building home equity.

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

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See also:
Detroit Mom Trades $96,000 House for Used Minivan
Fannie and Freddie Freeze Foreclosures for the Holidays
Viewpoint: Is the Housing Crisis Just a State of Mind?

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Find out how to calculate mortgage payments.
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]]>foreclosure crisishousing markethousing market 2012housing outlookmortgage defaultmortgage delinquenciesmortgagestransunionTransUnion delinquency forecastThe Associated Press2011-12-07T10:15:00+00:00Viewpoint: Is Housing Crisis Just a State of Mind?http://realestate.aol.com/blog/2011/11/30/viewpoint-is-housing-crisis-just-a-state-of-mind/http://realestate.aol.com/blog/2011/11/30/viewpoint-is-housing-crisis-just-a-state-of-mind/http://realestate.aol.com/blog/2011/11/30/viewpoint-is-housing-crisis-just-a-state-of-mind/#commentsFiled under: , , , , , ,

Is it possible that the housing crisis is really just a problem caused by our state of mind, not the state of the economy? Is the thing stopping people from buying houses nothing more than their perceptions? Apparently, to some extent, yes.

We are having what, if economists talked like this, could be described as an irrational fear of commitment.

The facts: The recession is considered over, the country's gross domestic product is growing, unemployment is down and consumer spending is up. Yet, the housing market remains comatose. The only explanation is that we are either all still unemployed and not being counted or we're scared out of our boots.

Want some more evidence that we're just one giant anti-anxiety pill away from fixing what ails the housing market?

1. The number of applications for mortgages is down.

It's becoming a broken record: Interest rates are at all-time lows yet nobody is applying for loans. Yes, lending standards are tighter now -- tight enough to put the kibosh on almost 16 percent of all home deals that open escrow -- but the bigger problem is that potential buyers are afraid to even try to get a loan. Loan applications for home purchases were down 10 percent in a week, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey.

Buyers are just plain scared that banks won't approve their loan. This is the grownup equivalent of hiding in the playground bushes during recess because you think the cool kids won't pick you for their team.

2. People don't believe the worst is over.

They are afraid that home prices might fall further. They are afraid that they could lose their jobs tomorrow. They are afraid of looking like a chump, buying when nobody else is buying.

Without question, the days of house-flipping are over. If you are buying, you are buying for the long haul. Remember this: Rents will most certainly go up -- that's why investors are buying properties like mad nowadays; but mortgages that are locked into the current record-low rates will not. If you are planning on staying put, doesn't it make sense to buy?

As for losing your job tomorrow, ask yourself this: Really? Do you really think that's likely? While new jobs aren't being created with anything close to wanton abandon, neither are they being eliminated with the gusto of three years ago. Do you really want to put your life on hold while you wait to see if The Man sneezes in your direction?

Looking like a chump is a tough one. No one wants to be the last soldier killed before the war ends and no one wants to be a homebuyer who bought when prices were still falling. But that gets back to the long-term strategy. You aren't buying for now, you are buying for the many years to come.

Fear can be paralyzing, but so can group-think. If you read how nobody is buying, you figure all those nobodies must know something. Yeah, they know how to be lemmings.

3. Consumer confidence has plunged, yet we are spending again -- just not on houses.

A recent Nielsen poll found that nine of 10 Americans think the country is still in a recession. The memo went out a while ago that the recession officially ended in June of 2009. Pain and misery have clearly lingered and depressed consumers don't spend money. But if we're all so depressed, how do you explain why consumer spending rose in the third quarter by 2 percent. We're even back to our old ways regarding charging and not saving: Consumer credit is back up to 2009 levels and our savings rate has dropped to 3.6 percent, the lowest level in four years. I see our old ways creeping back, don't you?

We may not be happy, but we're spending again. I have but one question: If you are willing to hit Macy's with enthusiasm, why not the housing market?

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Also see:
Survey: Most Boomers Would Cover Kids' Down Payment
Will FHA Be the Go-To Source for High-Cost Mortgages?
When It Comes to Mortgages, Women Don't Shop Enough

 

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]]>consumer spendingconsumer spending patternsAnn Brenoff2011-11-30T11:00:00+00:00When It Comes to Mortgages, Women Don't Shop Enoughhttp://realestate.aol.com/blog/2011/11/18/when-it-comes-to-mortgages-women-dont-shop-enough/http://realestate.aol.com/blog/2011/11/18/when-it-comes-to-mortgages-women-dont-shop-enough/http://realestate.aol.com/blog/2011/11/18/when-it-comes-to-mortgages-women-dont-shop-enough/#commentsFiled under: , , ,



There's a surprising new finding that says women get lousier mortgage rates than men, but not because of gender discrimination. It's because instead of shopping around for cheaper loans, they rely on the recommendations of friends.

To recap: When it comes to mortgages, women don't shop enough.

The report published in the Journal of Real Estate Finance and Economics set out to explain why women were 32 percent more likely to get a subprime mortgage than men in a 2006 study. According to a team of researchers led by Florida Atlantic University's Ping Cheng, the answer wasn't discrimination because of gender or even income disparities.

Women pay higher rates because they are more likely to listen to friends' recommendations, whereas men are more likely to shop around for the best deal.

"Our empirical test confirms that search effort is rewarded in marketplace, and suggests that gender disparity in mortgage rates may be addressed by policies aimed at improving women's financial literacy and search skills," the report summarizes.

It makes sense to Daily Finance columnist Laura Rowley. "It's not surprising, because mortgage shopping can be incredibly complex, so we look to people we can trust to help make the decision," says Rowley. "But this is one area where you don't want to get by with a little help from your friends."

Instead, she advises, call two mortgage brokers and a direct lender, preferably a local small or mid-size bank, and try the following script: "Hi, my name is ____ and I'm in the market to buy a $____ house, and I'm going to put down ____ percent. I'm getting three written estimates, and then I'm going to choose. Can you email me a cost-estimate worksheet stating all the fees and the interest rate?"

Be sure to get the estimates on the same day, as rates can change quickly. Also, don't ask for rates and fees by phone; unscrupulous brokers will simply low-ball their estimate to get you in the door, says Rowley.

For more tips on shopping for a mortgage, see these AOL Real Estate guides:

How Much Can You Afford [Video]
How to Get a Low Mortgage Rate
Mortgage Jargon in Simple Terms

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]]>Journal of Real Estate Finance and Economicsmortgage ratesmortgage rates for womenmortgagesshopping for a mortgageAnn Brenoff2011-11-18T11:00:00+00:00FHA Mortgage Loan Limits To Rise Againhttp://realestate.aol.com/blog/2011/11/16/fha-mortgage-loan-limits-to-rise-again/http://realestate.aol.com/blog/2011/11/16/fha-mortgage-loan-limits-to-rise-again/http://realestate.aol.com/blog/2011/11/16/fha-mortgage-loan-limits-to-rise-again/#commentsFiled under: , ,

WASHINGTON -- Congressional bargainers have agreed to increase the size of mortgages insured by the Federal Housing Administration in a compromise being hailed by the housing industry but criticized by conservatives.

Under the deal by House and Senate negotiators, the FHA would be able to insure mortgages worth up to $729,750 in the most expensive regions of the U.S. for the next two years. The ceiling had been raised to that level during the financial crisis, but by law it dipped down to $625,500 on Oct. 1.

However, in a bow to conservatives, the bargainers would not increase the current $625,500 limit on mortgages that can be backed in expensive communities by Fannie Mae and Freddie Mac, the government-controlled mortgage giants, and by the Veterans Affairs Department.

Realtors and home builders had lobbied hard to raise the loan limits for all four entities, arguing that the last thing the country's stubbornly weak housing market needs is stricter limits on government-backed mortgages. They were backed by members of Congress of both parties from areas where housing costs are high, like Southern California and New York.

"We'd have liked broader language, but the FHA is still an important part of the puzzle," Jamie Gregory, a lobbyist with the National Association of Realtors, said Tuesday.

'Beyond Ridiculous'

Conservatives and a majority of House Republicans oppose the increase, saying the government should reduce its involvement in subsidizing housing in hopes that the private market would step up.

In a written statement, the president of the conservative Club for Growth called increasing FHA's loan limits "beyond ridiculous" and said his group would note how lawmakers vote on the issue when they rate members of Congress seeking re-election. He said raising the limits does the opposite of reducing the federal role in housing markets -- something that many conservatives and the Obama administration say they want to strengthen the private market and protect federal taxpayers.

It has so far cost the government about $170 billion to rescue Fannie and Freddie, which nearly collapsed in 2008 because of risky loans in their portfolios.

The size of loans that federal agencies can back is based on a formula that includes a region's median housing cost. More than a fifth of the country's roughly 3,100 counties would be affected by the higher FHA loan limits.

Helping Buyers With Small Down Payments

FHA insurance is often used by buyers who put down small down payments. The agency has insured more than 40 million homes since it was established in 1934, and last year three quarters of those it insured were first-time buyers.

"It's good news for the more than 600 counties that faced loan limit decline," said Robert Dietz, an economist for the National Association of Home Builders. "FHA is important for first-time homebuyers, so that will help support housing demand."

The provision was included in a bill financing the departments of Housing and Urban Affairs, Commerce, Justice, Transportation and several other agencies for the rest of the government's fiscal year, which began Oct. 1. It would also keep all other federal agencies functioning through Dec. 16 as lawmakers continue working on permanent spending bills.

The Democratic-run Senate had voted to increase the loan limits in its housing bill, but the version approved by the Republican-led House left the ceilings alone.

The House and Senate are expected to approve the overall compromise legislation later this week.

Also see:
Fannie, Freddie Execs Score $100 Million in Bonuses
Community Rescues Vet From Foreclosure After TV Story Airs

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]]>fannie maeFHA loansFHA mortgagesfreddie macva loansThe Associated Press2011-11-16T10:49:00+00:00Barbara Corcoran on Refinancing Do's and Don'tshttp://realestate.aol.com/blog/2011/11/14/barbara-corcoran-on-refinancing-dos-and-donts/http://realestate.aol.com/blog/2011/11/14/barbara-corcoran-on-refinancing-dos-and-donts/http://realestate.aol.com/blog/2011/11/14/barbara-corcoran-on-refinancing-dos-and-donts/#commentsFiled under: , ,



The refinancing market is hot right now. Last week, applications were up by more than 10 percent.

But even if you can get approved by a lender--which is no easy task these days--that doesn't mean you should take whatever deal the bank offers you.

"Today Show" real estate expert Barbara Corcoran has some strong advice, particularly when it comes to avoiding extra charges at closing time.

In the video below, she explains the importance of the good faith estimate, whether it's worth using a mortgage broker and how to research potential lenders.

But the best thing you can do to protect yourself against unpleasant surprises, she says, is "bring a pushy friend with you who's going to ask the important questions that you yourself might not ask."

To which we say, Hey Barbara, want to come with us to meet our lender next Tuesday?

Also see:
Barbara Corcoran: Queen of NYC Real Estate Tells All

More great videos from AOL Real Estate:
Understanding Home Mortgages
Negotiating Strategies for Home Buyers

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]]>Barbara Corcoranrefinancingrefinancing dos and dontsrefinancing home mortgagestoday showAOL Real Estate Editors2011-11-14T09:00:00+00:00Refis Soar on Falling Rateshttp://realestate.aol.com/blog/2011/11/09/refis-soar-on-falling-rates/http://realestate.aol.com/blog/2011/11/09/refis-soar-on-falling-rates/http://realestate.aol.com/blog/2011/11/09/refis-soar-on-falling-rates/#commentsFiled under: ,

Mortgage applications increased 10.3 percent this past week as more homeowners refinanced existing mortgages or took advantage of lower interest rates to buy homes.

The Mortgage Bankers Association said its market composite index -- a measure of loan application volume -- increased 10.3 percent on a seasonally adjusted basis from a week earlier.

On an unadjusted basis, the index grew 9.9 percent from the previous week. Meanwhile, refinancing activity soared with the index that measures refinance loans jumping 12.1 percent from the previous week. The seasonally adjusted purchase index also rose 4.8 percent.

"Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and 30-year mortgage rates dropped to their second lowest level of the year," said Mike Fratantoni, MBA's vice president of research and economics. "Refinance applications jumped more than 12 percent to their highest level in a month and some lenders experienced even larger increases. As has been the case all year, many refinance applicants are opting to de-leverage by choosing 15-year mortgages."

Read the full story at HousingWire.

Also see:
Open Houses of the Week: Hobnob With the 1 Percent
Where Are the Real Home Bargains? Not Where You Think!
Viewpoint: Obama's Drop-in-the-Bucket Idea for Housing

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]]>housingwireMike Fratantonimortgage applicationsmortgage bankers associationmortgage marketmortgage ratesmortgage refismortgagesrefinancerefinance mortgageHousingWire2011-11-09T11:00:00+00:00Mortgage Rates Stay Low, But Homebuyers Aren't Budginghttp://realestate.aol.com/blog/2011/11/04/mortgage-rates-stay-low-but-buyers-arent-budging/http://realestate.aol.com/blog/2011/11/04/mortgage-rates-stay-low-but-buyers-arent-budging/http://realestate.aol.com/blog/2011/11/04/mortgage-rates-stay-low-but-buyers-arent-budging/#commentsFiled under: , , ,

mortgage ratesWASHINGTON -- The average rate on the 30-year fixed mortgage fell to 4 percent this week, nearly matching the all-time low hit just one month ago.

Freddie Mac said Thursday that the rate on the 30-year loan dropped from 4.10 percent last week. Four weeks ago, it dropped to 3.94 percent -- the lowest rate ever, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage fell to 3.31 percent from 3.38 percent. Four weeks ago, it too hit a record low of 3.26 percent.

Mortgage rates tend to track the yield on the 10-year Treasury note. They yield fell this week after investors shifted money out of stocks and into the safety of Treasurys on fears that Europe's debt crisis could worsen.

The Federal Reserve is also shifting more money into longer-term Treasurys to try to force mortgage rates lower. Treasury yields fall when buying activity increases.

Less Home Buying Than Expected

Federal Reserve Chairman Ben Bernanke said Wednesday that low rates have failed to spur the increase in home buying or mortgage refinancing that government officials had expected.

High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don't want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.

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The number of Americans who bought previously occupied homes fell in September and is on pace to match last year's dismal figures -- the worst in 13 years.

Sales of new homes rose last month after four straight monthly declines. But the increase was largely because builders cut their prices. And it followed a peak buying season that was the worst on records going back nearly 50 years.

A Run on Refinancing

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent.

The average rate on the five-year adjustable loan fell to 2.96 percent from 3.08 percent. That matches a record low hit four weeks ago.

The average rate on the one-year adjustable loan declined to 2.88 percent from 2.90 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.

The average rates don't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year fixed mortgage fell from 0.8 to 0.7. The average fee on the 15-year fixed loan was unchanged at 0.7. The average fees on the five-year adjustable loan one-year adjustable loan were also unchanged at 0.6.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

Also see:
Open Houses of the Week: Hobnob With the 1 Percent
Where Are the Real Home Bargains? Not Where You Think!
Mortgage Giant Asks Taxpayers for Another $6 Billion

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Find out how to calculate mortgage payments.
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Find foreclosures in your area.
Find rentals in your area.

 

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]]>Ben Bernanke mortgage ratesFreddie Maclow mortgage rates housing marketmorgage rates home buyingmortgage ratesMortgage Rates Stay Lowmortgage rates treasury notesyield on the 10-year Treasury noteThe Associated Press2011-11-04T09:45:00+00:00