UK mortgage approvals fall as people endure three-hour interviews with their bank

Henry Pryor, high end estate agent, said: “High house prices require big
mortgages so whilst the amount being lent remains eye-watering, the number
of mortgages being offered is falling. Some of this decline can be blamed on
MMR the ‘hammer to crack a nut’ reaction from the powers that be to what
they felt were failings in the mortgage market but part of this is simply
house buyers calling time on ever-increasing asking prices.”

Buyers, lenders and surveyors alike have been spooked by fierce rhetoric from
Mark Carney who has fingered the hot housing market as the biggest threat to
the UK’s economic recovery – which has had a dampening effect on the number
of people applying for mortgages as they await further news of interest rate
rises.

While the lengthy mortgage approval process has disrupted agreed sales, estate
agents have also seen cautious surveyors downgrade house prices after the
point at which offers have been accepted.

“We are increasingly seeing a gap between agreed sales and sales that
complete,” said Mr Wilson.

This is driving a higher proportion of aborted sales as vendors then break the
deal and relist the property, chasing the higher price, he explained.

Article source: http://www.telegraph.co.uk/finance/economics/11067761/UK-mortgage-approvals-fall-as-people-endure-three-hour-interviews-with-their-bank.html

15-Year Mortgage Rates Sink; Homeowners Save 64%

15-year mortgage rates vs 30-year mortgage rates

Mortgage rates begin the week at their lowest point for 2014 and the best levels since June of last year.

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year rate is now 4.10 percent. However, it’s homeowners using 15-year loans who stand to save the most.

With the average 15-year mortgage rate at 3.25% — 85 basis points (0.85%) below comparable 30-year rates — homeowners using 15-year loans are reducing their total mortgage interest paid by 64 percent.

It’s an excellent time to consider a 15-year mortgage.

Click to compare today’s mortgage rates.

15-Year Mortgage Is A Saver’s Dream

15-year mortgages save money over the long-term as compared to 20-year and 30-year loans. There are two reasons why. The first reason is that 15-year mortgages are available at lower interest rates and APRs than longer-term loans.

Lower mortgage interest rates mean less mortgage interest paid to bank.

The second reason why 15-year mortgages save money is that, after 15 years, they’re finished; there are no additional payments due to the bank.

At today’s mortgage rates, assuming a loan size at the national average of $268,500, homeowners using a 15-year mortgage will save more than $127,000 in mortgage interest paid. That’s money which can be used for college tuition, retirement, or anything else.

With a 15-year loan, at today’s mortgage rates, you’ll save 64%.

Click to see today’s live rates.

Homeowners Increasingly Choose 15-Year Loans

According to Freddie Mac, homeowners are choosing 15-year loans over 30-year loans at an increasing rate.

During this year’s second quarter, for example, 34% of homeowners who refinanced their 30-year fixed rate mortgage decided to refinance into a 15-year loan — the highest percentage in last twelve years and nearly double the rate from 2012.

And, thankfully, regardless of your loan type, 15-year mortgages are available.

Conventional 15-year mortgage rates average 3.25 percent nationwide for borrowers willing to pay 0.6 discount points at closing. 0.6 discount points carries a cost of 0.6 percent of your loan size.

A homeowner in Orange County, California, therefore, borrowing at the local conforming loan limit of $625,500 could expect to pay discount points in the amount of $3,753.

Mortgage applicants opting for a zero-closing cost conventional mortgage pay no points.

For borrowers using FHA loans and VA loans, 15-year mortgage rates can be even lower than with conventional financing. Some banks now quote 15-year rates in the 2s; and discount points are rarely required.

Furthermore, FHA borrowers have additional incentive to select 15-year financing — FHA MIP is relaxed for borrowers with loan terms of 15 years or fewer.

Click to compare today’s 15-year rates

Considerations For The 15-Year Loan

The 15-year mortgage offers huge savings to U.S. homeowners, but the program won’t be for everyone — especially because monthly payments are much higher than for a comparable 30-year loan.

At today’s mortgage rates, the monthly payment for a 15-year loan is forty-five percent higher than a 30-year loan. This means that, at the average mortgage loan size of $286,500, a homeowner would pay $589 more per month on the 15-year amortization schedule.

This can be a budget-breaker for some households; and, it’s harder to meet debt-to-income requirements with a larger monthly mortgage payment. Therefore, before considering the 15-year mortgage, make sure the monthly obligation is a manageable one.

If you think the payments of a 15-year loan are too much to manage, though, but want the benefits of paying less interest, consider taking a 30-year loan and paying it as a 15.

It’s always your option to send extra principal each month along with your payment. Your mortgage lender can tell you how much extra to send each month so that your 30-year loan is shortened to 15 years.

You can also use the mortgage calculator to check the math yourself.

Get Today’s Mortgage Rates

Mortgage rates are at their lowest levels in more than a year. It’s an excellent time to consider a 15-year mortgage — either for a purchase or home refinance.

Get today’s live mortgage rates now. Rates are available online for free with no social security number required to get started and no obligation to proceed.

Click to get a rate quote.

Try the Mortgage Payment Calculator

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

Article source: http://themortgagereports.com/16569/15-year-mortgage-rates-vs-30-year

Russian bank offers cats with mortgages

Worst 3 bank promotions 

Would you like a cat with that mortgage?

Russia’s biggest bank, Sberbank (SBRCY), is offering to deliver cats to the doorsteps of new mortgage clients as part of a quirky promotional campaign.

In Russia, it’s considered good fortune if a cat enters a new home ahead of the owners.

A few customers have already signed up, though cat lovers may be disappointed to hear that the kitties will be on loan for just two hours and then whisked away.

Clients can choose from 10 felines with names like Caesar and Caramel. But they’ll have to hurry to secure one — the bank is limiting the cat campaign to 30 new mortgages only.

Sberbank’s promotion may be part of an effort to present a warm, fuzzy image since getting slapped with European sanctions one month ago.

The bank, which serves more than half the Russian population, has been banned from raising medium and long-term financing in Europe. Its shares have plunged by 28% since the start of the year.

Western sanctions against Russia are part of an effort to punish President Vladimir Putin for supporting separatist fighting in eastern Ukraine.

Related: Lion-ripped jeans sell for $1,500

The cat campaign has generated a lot of buzz on social media, but it hasn’t all been positive.

One Twitter user — @Tsimchik — told Sberbank: “Reduce your interest rates and people will have enough money to run a cat farm!”

A Facebook user from Iceland was keen on the concept, but not the cats. “I would take out a second mortgage if the bank gave me a monkey,” he said.

Related: The top 15 sanction targets

The Russian mortgage market has been expanding by more than 30% per year since 2009, according to statistics from the Russian central bank.

Mortgage lending in rubles has grown by 41% in the first seven months of 2014 compared to the same period in 2013.

–CNN’s Olga Pavlova in Moscow contributed to this report.

Article source: http://money.cnn.com/2014/09/01/news/companies/sberbank-mortgage-cats-russia/

Bankrate: Mortgage Rates Post Mixed Results

NEW YORK, Aug. 28, 2014 /PRNewswire/ -- Mortgage rates were little changed, with benchmark 30-year fixed mortgage rate inching lower to 4.23 percent, still a 14-month low. The 30-year fixed mortgage has an average of 0.27 discount and origination points according to Bankrate.com's weekly national survey.

To see mortgage rates in your area, go to http://www.bankrate.com/funnel/mortgages/.

The average 15-year fixed mortgage rate nosed higher to 3.38 percent, while the larger jumbo 30-year fixed mortgage rate held steady at 4.29 percent. Adjustable rate mortgages were higher, with the 5-year ARM rebounding to 3.32 percent and the 7-year ARM rising to 3.51 percent.       

The big event of the past week as far as interest rates are concerned was a widely anticipated speech from Fed Chairwoman Janet Yellen. With Yellen not making any unexpected pronouncements, financial markets carried on as usual with the stock market going on to set new record highs and the bond market motoring along. Mortgage rates are closely related to yields on long-term government debt and with Treasury yields staying low, mortgage rates remain at the lowest levels since June 2013. No obvious catalyst for big rate movements exists between now and the release of the August employment report on Sept. 5.

As 2013 came to a close, the average 30-year fixed mortgage rate was 4.69 percent. At that time, a $200,000 loan would have carried a monthly payment of $1,036.07. Mortgage rates have moved lower thus far in 2014, and with the average rate now 4.23 percent, the monthly payment for the same size loan would be $981.54, a savings of more than $54 per month for anyone that waited.

SURVEY RESULTS

30-year fixed: 4.23% -- down from 4.24% last week (avg. points:0.27)
15-year fixed: 3.38% -- up from 3.37% last week (avg. points:0.18)
5/1 ARM: 3.32% -- up from 3.28% last week (avg. points:0.14)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates.

The survey is complemented by Bankrate's weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. The majority of the panelists – 64 percent – expect mortgage rates to remain more or less unchanged over the coming week. The remaining panelists are evenly split, with 18 percent forecasting an increase and 18 percent predicting a decline.   

For the full mortgage Rate Trend Index, go to http://www.bankrate.com/news/rate-trends/mortgage.aspx.

To download the Bankrate Mortgage Calculator Mortgage Rates iPhone App 2.0 go to https://itunes.apple.com/us/app/bankrate-mortgage-calculator/id551454062?mt=8.

About Bankrate, Inc.

Bankrate is a leading publisher, aggregator, and distributor of personal finance content on the Internet. Bankrate provides consumers with proprietary, fully researched, comprehensive, independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes. The Bankrate network includes Bankrate.com, CreditCards.com and InsuranceQuotes.com, our flagship websites, and other owned and operated personal finance websites, including Caring.com, Interest.com, Bankaholic.com, Mortgage-calc.com, CreditCardGuide.com, Nationwide Card Services, CarInsuranceQuotes.com, InsureMe, CreditCards.ca, and NetQuote.com. Bankrate aggregates rate information from over 4,800 institutions on more than 300 financial products. With coverage of nearly 600 local markets in all 50 U.S. states, Bankrate generates over 172,000 distinct rate tables capturing on average over three million pieces of information daily. Bankrate develops and provides web services to over 80 co-branded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the Internet such as Yahoo!, AOL, CNBC, and Bloomberg. In addition, Bankrate licenses editorial content to over 500 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times, The Los Angeles Times, and The Boston Globe.

www.bankrate.com

For more information contact:
Kayleen Yates
Senior Director, Corporate Communications
kyates@bankrate.com
(917) 368-8677          

Logo - http://photos.prnewswire.com/prnh/20130805/FL58072LOGO

SOURCE Bankrate, Inc.

Copyright (C) 2014 PR Newswire. All rights reserved

Article source: http://www.marketwatch.com/story/bankrate-mortgage-rates-post-mixed-results-2014-08-28

Current Mortgage Rates Dropping For FICO Scores Of 580+

Average FICO score of a closed loan is down to 727

Mortgage Interest Rate Quotes In The 3s

Low FICO score? You’re likely finding it easier to get approved for a mortgage.

The average credit score on closed loans is now just 727 – ten points lower than it was just one year ago. Along with today’s mortgage rates, which are at their best levels of the year and lowest point since June 2013, the FICO drop gives more U.S. homeowners the chance to refinance their homes.

If you haven’t refinanced to current mortgage interest rates, or compared today’s pricing, it’s an opportune time to consider your options.

Many mortgage lenders now quote rates in the 3s with equally low APRs.

Click to get an instant mortgage rate quote.

Average Mortgage FICO Score Drops

In its monthly Origination Insight Report, mortgage software firm Ellie Mae reports that the average FICO score of a closed loan dropped to 727 in July. It’s a 10-point reduction from one year ago and well below last year’s average.

With less-than-perfect credit, mortgage applicants are doing just fine, a reversal from last decade’s mortgage market tightening. 

By way of definition, “FICO score” is another way of saying “credit score”. The FICO model, which was first developed by the Fair Isaac Company, has been in use for decades. It’s meant to predict the likelihood of a person going delinquent on a mortgage.

High FICO scores correlate with a low default probability and low FICO scores correlate with a high default probability. Recently, the makers of the FICO score announced an update to their model which is expected to raise borrower credit scores across the board.

Under the new scoring system, mortgage applicants with medical collection items and no other items in collection, as one example, are expected to see a credit score boost of approximately 25 points. Other borrowers may see improvements of 100 points or more.

However, because lenders have lowered their average FICO requirements, all mortgage applicants should be finding it easier to get approved.

If you’ve been turned down for a mortgage because of your low credit score, it may be worth applying again. Some lenders are accepting scores as low as 580. 

Click to get a live mortgage rate quote.

Your FICO Under 640? Look At FHA Loans.

There are four “common” government-backed mortgage loans. One is the conventional loan, which is backed by Fannie Mae or Freddie Mac. One is the Rural Loan, which is backed by the USDA. One is the VA loan backed by the Department of Veterans Affairs; and, the last is the Federal Housing Administration’s FHA loan.

FHA loans are a big reason why Ellie Mae reports falling credit scores. Earlier this year, lenders dropped the minimum FHA credit score by 60 points. You can now get an FHA mortgage with a credit score of 580 or higher.

Indeed, as compared to other loan refinanced loan types, the average FICO score for an FHA loan was lowest in July.

  • Conventional refinance : 733 FICO score, on average
  • VA refinance : 704 FICO score, on average
  • FHA refinance : 673 FICO score, on average

FHA loans now account for 20% of all mortgage transactions and, predominately, they’ve been used for purchasing homes. This is because, in addition to allowing credit scores down to 580, the FHA requires just 3.5% downpayment on a home. 

This is the lower than the five percent downpayment required by Fannie Mae or Freddie Mac; and is available to all buyers in all states. By comparison, VA loans and USDA loans allow 100% financing, but buyers must meet unique qualification standards.

For example, in order to use a VA loan, mortgage applicants must be an active member of the military or a veteran of the U.S. Armed Services. To use a USDA loan, buyers must live in a non-urban area and must qualify under county-by-county USDA income limits.

FHA loans are accessible and easy for which to qualify. Furthermore, they’re assumable. This means that a home with FHA-backed financing can be sold with its mortgage “attached”. When you lock a 3.5% mortgage rate today, you can sell your home in 10 years with the accompanying 3.5% mortgage rate — regardless of where current mortgage rates are a decade from now.

FHA loans also allow access to the FHA Streamline Refinance.

The FHA Streamline Refinance is one of the simplest and fastest refinance programs available today. Similar to the VA Streamline Refinance, the FHA program waives the need for income and employment verification, for home appraisals, and for credit scores.

Mortgage rates for the FHA Streamline Refinance are at a 14-month low right now. 

Get Today’s Mortgage Rates Now

Mortgage rates are at their lowest levels of 2014 and their best prices since June of last year For borrowers with low credit scores, the news is even better — lenders are making it easier to qualify.

So, compare today’s mortgage rates and see for what you’ll qualify. Rates are available online at no cost, with no obligation, and with no social security number required to get started.

Click here to get today’s live rates.

Try the Mortgage Payment Calculator

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

Article source: http://themortgagereports.com/16562/fha-mortgage-rate-fico-score

Draghi Cuts Mortgages 17000 Kilometers Away: Australia Credit

European Central Bank President
Mario Draghi’s shift toward quantitative easing is reverberating
17,000 kilometers (10,500 miles) away in lower Australian
mortgage rates.

Draghi’s Aug. 22 comment that he will “use all the
available instruments” to stabilize prices added to an already
benign interest-rate environment that sent relative yields on
Australian financial debt to seven-year lows. That’s helping
banks trim mortgage rates, providing the Reserve Bank of
Australia with a de facto easing even as investors bet it will
keep policy unchanged tomorrow for a 13th month.

Lower home-loan rates are putting more cash in consumers’
pockets, aiding RBA Governor Glenn Stevens’s efforts to
rebalance growth toward domestic demand as mining investment
wanes. The spread between financial debt and government notes
touched 102 basis points in July, the narrowest since October
2007, Bank of America Merrill Lynch data show. The gap averaged
six basis points less than for U.S. banks in the past year.

“The likely action from the ECB will add to a very low
interest-rate environment globally,” said Susan Buckley,
Brisbane-based managing director for global liquid strategies at
QIC Ltd., which oversees about A$70 billion ($65.5 billion).
“You’ve got another major central bank potentially buying
paper in the market, so that’s going to help bank funding
generally speaking globally and that flows through to
Australia.”




Photographer: Patrick Hamilton/Bloomberg

Glenn Stevens, governor of the Reserve Bank of Australia, focuses on household payments when assessing policy implications on the economy. Close

Glenn Stevens, governor of the Reserve Bank of Australia, focuses on household payments… Read More

Open

Photographer: Patrick Hamilton/Bloomberg

Glenn Stevens, governor of the Reserve Bank of Australia, focuses on household payments when assessing policy implications on the economy.

Real Rates

Traders are pricing in 8 basis points of reduction in the
cash rate over the next 12 months, according to swaps data
compiled by Credit Suisse Group AG. All 31 economists surveyed
by Bloomberg expect the central bank to keep the rate unchanged
at 2.5 percent when its board meets in Adelaide tomorrow. QIC
predicts a rate increase in the third quarter of 2015.

Stevens focuses on household payments when assessing policy
implications on the economy. Since the RBA last lowered the cash
rate target in August 2013, five-year fixed rates offered by
Australia’s four major banks have fallen as much as 70 basis
points, according to home-loan broker Mortgage Choice Ltd.

“The average interest rate on housing loans is now around
15 basis points lower than it was after the reduction in the
cash rate target in August 2013,” the RBA said in its quarterly
statement on monetary policy last month. “Competition for
lending remains strong, with interest rate discounting and
broker commissions increasing over the past year.”

Mortgage Growth

Low rates have spurred home prices and boosted residential
construction, which the central bank predicts will help fill a
gap in growth and soak up some of the excess labor of former
mine workers.

Central bank data released three days ago showed mortgage
lending to investors
in the 12 months ended July surged 8.9
percent, the fastest pace since May 2008. Home prices across
Australia’s state and territory capitals rose 10.2 percent over
the year through July from a year earlier, according to the RP
Data-Rismark Home Value Index.

While the central bank’s 2.25 percentage point cash rate
reduction from late 2011 to August 2013 has spurred property
prices, companies have been slower to respond.

Animal Spirits

Stevens, in semi-annual testimony last month said business
needs to release its “animal spirits” and opt for investment
over dividends. He said monetary policy couldn’t trigger the
confidence and preparedness to take a risk. “I’ve allowed the
horse to come to the water of cheaper funding. I can’t make it
drink,” he said Aug. 20. The RBA on Aug. 8 cut its economic
growth and inflation forecasts through mid-2015.

Australian listed companies, which reported their results
last month for the six months through June, exceeded
expectations in 54 percent of cases. That compared to a norm of
43 percent, giving the recent period the best results in nine
years, according to Shane Oliver, head of investment strategy at
AMP Capital Investors Ltd.

The key impediment to Stevens’s plan for a shift in the
drivers of growth is the Australian dollar, the best performing
group-of-10 currency this year. It has defied a 35 percent drop
in the price of iron ore, Australia’s biggest export.

“Instead of the adjustment to the end of the mining boom
coming from a lower Australian dollar, it is occurring through
falling real wages and a rising unemployment rate,” said Paul Bloxham, chief Australia economist at HSBC Holdings Plc in
Sydney, who put back his call for a rate increase to the second
quarter of 2015. “Low interest rates are also largely doing
their job, supporting housing prices and dwelling construction.
But, in the face of falling commodity prices, the high
Australian dollar has acted as a drag.”

Drag on Growth

The jobless rate jumped to a 12-year high of 6.4 percent
in July from 6 percent in June, and the central bank said Aug. 8
unemployment is unlikely to fall in a sustained way before 2016.

The currency probably slowed the economy last quarter, with
analysts predicting growth decelerated to 0.4 percent from the
first three months of the year, when it increased 1.1 percent.
The economy of Australia’s biggest trading partner, China, will
probably grow this year at the weakest pace since 1990, a
Bloomberg survey showed.

“The outlook for iron ore and coal prices is a source of
uncertainty for the domestic economy,” the RBA said Aug. 8.
“As is typical, there is a wide range of forecasts by market
analysts for these commodity prices, with bank estimates towards
the lower end.”

To contact the reporter on this story:
Michael Heath in Sydney at
mheath1@bloomberg.net

To contact the editors responsible for this story:
Stephanie Phang at
sphang@bloomberg.net
Iain McDonald, Garfield Reynolds

Article source: http://www.bloomberg.com/news/2014-08-31/draghi-cuts-mortgages-17-000-kilometers-away-australia-credit.html

Money Talk: Lying to Mortgage Lender Not a Good Option

Question: My mother passed away unexpectedly in late 2008. She had a mortgage, and the house was under her name only. She didn’t leave a will. My family is still paying the loan, and the company does not know my mother passed away. We don’t have a lot of money and we need advice on how to get the house under my sister’s name (she has good credit). We need to get the loan modified since the monthly payment is almost $1,000 and only about $70 goes toward the principal.

Answer: Your mother may not have created a will, but your state has laws that determine what was supposed to happen after her death. Lying to the mortgage lender is not one of the legal options.

Federal law allows mortgages to be transferred to heirs. (Without a will, those heirs usually would include a surviving spouse and the dead person’s children.) Transfers because of death typically are exempt from the due-on-sale or acceleration clauses that otherwise would allow the lender to demand full payment.

To get the mortgage transferred, however, you usually need to have started the probate process.

At this point, you should consult a mortgage broker about the likelihood of getting a refinance or a loan modification. If the home is deeply underwater, it may not be possible or worth the effort. If foreclosure is likely, it would be better not to transfer the mortgage as the heirs’ credit would suffer significant damage.

If your plan is feasible, however, then you’ll need to consult a probate attorney. You may not have a lot of money, but you need to pool what you have to hire someone who can dig you out of this mess.

Question: After reading your column about the best ways to pay while traveling in Europe, I want to share my experience. I was unhappy with the foreign transaction fee charged on my Citibank credit card, so on my next trip to Europe I primarily used my Capital One card. Imagine my disappointment to find that Capital One’s currency conversion formula was much less favorable to me than Citibank’s.

Answer: Credit card expert Odysseas Papadimitriou suspects you were comparing purchases made on different days, or even on different trips. Although one of your cards charges a foreign transaction fee and the other doesn’t, both cards get the most favorable rate from their card network’s exchange rate. Visa cards would get the Visa card network exchange rate, while MasterCard would get the MasterCard network exchange rate. If both your cards were Visas, for example, they would get the same exchange rate, but the one that charged the foreign transaction fee would increase your cost by that amount (typically 1 percent to 3 percent).

There may be “tiny” differences between those Visa and MasterCard exchange rates on a given day, but one wouldn’t be “much less favorable” than the other, Papadimitriou said.

And the exchange rates are certainly better than what you’d get by exchanging dollars for euros at a bank in advance of your trip, or by using currency exchange services once you got there.

So the fact remains that the cheapest way to convert currency is to do so automatically by making purchases with a credit or debit card that doesn’t charge foreign transaction fees. Here’s another suggestion for reducing fees abroad:

Question: One option for folks traveling to Europe to save money on ATM withdrawals is to check with their bank and find out if there is a checking or savings account that carries the benefit of the bank canceling foreign ATM fees as well as their own fees. Before I traveled to Scotland to visit my daughter, I switched accounts at my bank to one where there are no fees for using other banks’ ATMs. Worked brilliantly!

Answer: If your own bank doesn’t offer this option, it may be worth setting up a checking account with a bank that does. Charles Schwab’s high-yield checking account offers unlimited ATM fee rebates worldwide with no foreign transaction fees, and Capital One 360, the online bank, waives ATM fees and absorbs MasterCard’s 1 percent foreign transaction fee. USAA Bank charges a 1 percent foreign transaction fee but doesn’t charge a fee for the first 10 ATM withdrawals.

Liz Weston is the author of The 10 Commandments of Money: Survive and Thrive in the New Economy . Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon, No. 238, Studio City, Calif. 91604, or by email at liz@lizweston.com. Distributed by No More Red Inc.

Article source: http://www.vnews.com/news/nation/world/13338135-95/money-talk-lying-to-mortgage-lender-not-a-good-option

Average U.S. 30-year mortgage rate stays at 4.1 percent

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Article source: http://www.poughkeepsiejournal.com/story/life/2014/08/30/mortgage-rates-august/14878679/

Some singles see value in mortgage payment – Pittsburgh Post

Steven Ganley was lucky enough to earn his master’s degree in accounting from Duquesne University last year without piling up any debt. In the year after he graduated, the 25-year-old landed a full-time job as a staff accountant at a Downtown firm, lived with his parents in Bethel Park, and banked money each month as though he were paying rent.

Despite his clean balance sheet and careful money management, several credit card companies turned him down. Yet he recently qualified for a 30-year mortgage at 3.99 percent through the Federal Housing Authority.

“I believe I have the world record for not establishing any credit and still being able to get a home loan,” said Mr. Ganley, who closed on a $150,000 three-bedroom home in Bethel Park last month, which he purchased with a 5 percent down payment.

Married couples with children continue to be the leading demographic for the single-family, home-buying market here and across the nation. But some singles — especially young singles — recognize that a mortgage payment on a house can often be the same or less than what they would spend on rent.

The barriers to homeownership that many in their 20s and 30s face — higher unemployment, lower wages and student debt — have made it less likely for people in that age group to be owners than in previous generations. Tighter lending standards also have been a factor in a slight decline in single men and single women homebuyers, according to the Washington. D.C.-based National Association of Realtors.

For as long as the Realtors group has been tracking data on married couples and single buyers — since 1981 — the percentage of single homebuyers has historically hovered around 20 percent to 25 percent. It fell nationally from 28 percent in 2011 to 25 percent in 2013, according to NAR.

“One of the things we have seen is that single men homebuyers are about half the share of single female homebuyers,” said Jessica Lautz, director of member and consumer research for the National Association of Realtors. “Single females make up the largest share of single buyers. Single female homebuyers are second only to married couples.”

Many singles enter the real estate market following major family changes, such as death and divorce.

“Lenders look more favorably toward dual incomes, and perhaps they have more buying power as well,” Ms. Lautz said. “So, unfortunately, we have seen both the share of single female and single male homebuyers drop off.”

Single homebuyers come to the market from all walks of life, and for different reasons that often extend beyond the financial ones. Some want an investment that will pay off down the road, while others are looking for a place to live that suits their lifestyle.

After renting for years, Christa Vattimo, 31, managed to overcome the down payment hurdle by borrowing money from her company retirement savings account at PNC Bank, where she works as a loan analyst. She also obtained a mortgage through PNC for a $97,000, three-bedroom brick home in West View.

“I didn’t want to keep throwing money down the drain renting,” said Ms. Vattimo, a single mother of a 10-year-old son and a 1 1/2 year-old daughter. “It was important to me to be a homeowner. I want to have equity in something.

“I was nervous that I’d get denied for a home loan being a single parent with money coming out of my salary for day care and child expenses. I could not be more proud of myself being a single parent and a homeowner. Being able to do that is extremely gratifying.”

For younger buyers like Mr. Ganley, it can be a challenge to get any type of credit approval, let alone a mortgage.

He said although he had no debt and thousands of dollars in a savings account, Discover and MasterCard rejected him. Dick’s Sporting Goods also denied him a credit card, and he suffered more embarrassment when Macy’s department store rejected his credit application while a line of people stood waiting behind him at the checkout counter.

Though he had accumulated $8,000 in a savings account at PNC Bank, the bank would not approve him for one of its credit cards with a $300 limit.

“That had a lot to do with me applying for my mortgage at Dollar Bank instead of PNC Bank,” Mr. Ganley said.

“In the long run, owning is so much better than renting,” he said. “I can build equity and do projects that transform the place before my eyes. When I see something I’ve done, it’s kind of rewarding.”

Howard “Hoddy” Hanna III, chairman and CEO of O’Hara-based Howard Hanna Real Estate Services, said single homebuyers have consistently made up about 25 percent of the Pittsburgh region’s residential real estate market.

“A lot of those singles buying houses are not first-time buyers,” Mr. Hanna said. “They are people going through a marital change such as a divorce or maybe even the death of a spouse.

“Years ago, when people got divorced, they rented apartments and didn’t go right back into buying. Now when two people get divorced, after they sell a house for $400,000, the husband will go back out and buy a house for $250,000 and the wife buys a condo for $100,000.”

Mr. Hanna said single buyers are behind the explosion in Pittsburgh’s Downtown residential real estate market.

“Single buyers want to live, work and play in areas that are close together,” Mr. Hanna said. “We are selling more urban houses to singles in Pittsburgh and Cleveland. The density of single buyers is in urban areas where they can walk to restaurants.

“You are less likely to find single buyers in the suburbs. Suburbs still attract couples and families.”

Nicole McMahon’s main consideration was finding a house she liked that was near her job at Westinghouse Electric where she works as a business analyst.

Ms. McMahon, 24, had lived with her parents in Murrysville after graduating from Penn State in December 2013 with a degree in information science technology. She recently used an inheritance from her grandparents to buy a $169,900 three-bedroom, three-bathroom brick home in Rochester, Beaver County, about 20 minutes from Cranberry.

“It’s a little more nerve-racking without having someone else to rely on,” she said of the home-buying experience. “It was a little scary to go it alone. But I managed to survive it.”

“A lot of my friends are married or engaged,” Ms. McMahon said. ”I don’t have anyone now, and I wanted freedom from my parents. It’s nice to get away from my parents, and I didn’t want to wait for Prince Charming because I don’t know when that will be.”

Article source: http://www.post-gazette.com/business/2014/08/31/Some-singles-see-value-in-mortgage-payment/stories/201408310101

The 9 biggest mortgage mistakes

A mortgage is the biggest debt most of us will ever carry, and a home is the most expensive purchase we will ever make.

That’s why it’s so important to avoid pitfalls like making a major job change right before your home loan closes or failing to anticipate long-term home ownership costs.

These mistakes and others can cause you to pay more than you need to, prevent your loan from closing or even lead to bankruptcy.

Don’t let the unfamiliarity and enormity of the situation scare you. People make smart mortgage choices every day. They get home loans with great interest rates, low fees, and predictable, fixed monthly payments and they make a budget ahead of time so they don’t get in over their heads.

Our guide will turn you into a savvy borrower so that owning your home will be a joy, not a burden, and will help you achieve long-term financial security.

1. Not getting a fixed-rate loan

With fixed-rate mortgages priced above record lows, you might be tempted to grab an adjustable-rate mortgage.

But unless you’re planning to move within five to seven years, you’ll be better off financially sticking with a fixed-rate loan. 

Rates are still historically low, so if you take out a fixed-rate loan now, you may never have to worry about refinancing. An ARM might offer you a lower payment now, but it will eventually reset, most likely at a higher rate.

“There is a lot of risk if rates rise and you cannot get out of the ARM at the right time,” says Phillip Christenson, a chartered financial analyst and owner of Phillip James Financial, a financial planning and investment management company in Plymouth, Minn.

You might not be able to refinance or afford the new payment once rates rise. Or the housing market could make it difficult to sell.

Our extensive database of current mortgage rates is a good place to start your search for a fixed-rate loan. It allows you to quickly and easily compare the lowest available rates and fees from dozens of lenders.

2. Ignoring the true costs of home ownership

The sale price you agree to pay for the home isn’t the cost of owning the home.

First, look at the amortization schedule on your mortgage to see what the home will cost you over the life of the loan, says Realtor Lou Cardillo of Cardillo Real Estate in Yorktown Heights, N.Y. The amortization schedule shows the total amount of interest and principal you’ll pay. 

It can be eye-opening to see that borrowing $250,000 for 30 years at 4.15% brings your total purchase to $437,493. Use our mortgage calculator to estimate your payments over the life of a loan.

Also learn about the property tax system in your city or town, Cardillo says, to see when taxes can increase and by how much. Property taxes can add thousands of dollars to the cost of your home each year.

You’ll additionally be responsible for homeowners insurance, possibly mortgage insurance, all the ongoing costs of furnishing and maintaining a home, and maybe some monthly bills you didn’t directly pay as a renter, like trash and water.

3. Letting the bank tell you what you can afford

Your lender is not a good judge of how much house you can afford. Banks are in the business of maximizing their earnings from interest, closing costs and the sale of mortgages to investors, not in making sure you don’t overextend yourself.

If you rely on a bank to set your price range, you will most likely find yourself in over your head, says Jamie Pandolfo, senior mortgage consultant with Flat Branch Home Loans in St. Louis, Mo.

Banks will qualify you based on your gross (pretax) income, but they don’t account for many monthly expenses such as insurance, utilities and child care when determining your maximum approval amount, she says.

These expenses take up much more of some borrowers’ budgets than others.

“When deciding to purchase, it’s best to start by creating a budget and determining a comfortable monthly payment,” Pandolfo says.

As a general rule of thumb, you should not spend more than 28% of your gross income on housing. This includes principal, interest, taxes and insurance.

4. Not thinking about the future

The typical mortgage term is 15 or 30 years. And while most people sell or refinance before paying off their home loan, circumstances can radically change in even five to 10 years.

“The biggest mistake most buyers make is they only look at the ‘now’ of financing,” says Realtor Lou Cardillo of Cardillo Real Estate in Yorktown Heights, N.Y. “This is a mistake because life changes rather quickly.”

Job losses, relocation, death, marriage, babies and even divorce can dramatically change what you can afford. 

Think about what might happen in your life during the next decade and what kind of monthly payment might be feasible under those conditions before you commit.

While your future plans might include moving up the career ladder, you shouldn’t count on a higher income.

Set yourself up to be comfortable in good times and in bad — not to barely get by and possibly lose your home.

5. Acting like the loan is final before closing

Just because a seller has accepted your offer and a lender has approved your mortgage doesn’t mean your home purchase is a done deal.

There are a number of behaviors to avoid before you close, says Richard Whitman, vice president of mortgage lending at Texas Trust Credit Union in north Texas.

Don’t quit your job; lenders want to see two years of consistent employment, he says, and they’ll verify it just before closing.

Don’t open new credit cards, take out new loans or use more of any existing credit lines. If you have more debt, you won’t be able to borrow as much.

You shouldn’t even make large purchases with cash, because lenders want to see that you have enough savings to keep paying your mortgage in an emergency. 

And if you didn’t lock in your rate and interest rates go up, you might qualify for less than you need to buy the home.

Finally, don’t miss any deadlines for returning loan paperwork.

6. Ignoring APR

Some lenders advertise low interest rates but make up for them with high fees.

A big mistake consumers make is being swayed to choose a particular lender based on these abnormally low promotional rates, says broker Michael Mahon, the executive vice president of HER Realtors in Columbus, Ohio.

You need to compare annual percentage rates between mortgage offers to see which one really costs the least.

APR includes the lender’s fees and shows the loan’s true cost.

A $100,000 30-year fixed-rate loan with an interest rate of 3.85% where the lender charges 2 points, a 1% origination fee and $1,500 in other closing costs has a 4.215% APR. 

The same $100,000 loan with an interest rate of 4.05%, no points, a 1% origination fee and $800 in other closing costs has a 4.199% APR.

While the first loan looks cheaper because of its lower interest rate, it not only costs more in the long run, it also requires you to bring more cash to the table. 

Lenders are required to disclose APR on a Truth-in-Lending disclosure form. Read it.

7. Thinking you can carry two mortgages

No one wants to move twice. So if you’re moving from one house to another, you might be tempted to buy the new home before selling your current one. 

This is a mistake, says certified financial planner Curtis W. Chambers, founder and managing member of Chambers Financial Group in Clearwater, Fla. An unsold home with a mortgage can mean carrying two loans.

“I see this happen all the time, and it can be a tremendous source of stress. It is usually easier to buy a home than to sell one,” Chambers says.

Once you sell, you’ll have a 30- to 60-day closing period to find a new home and make a seamless transition, assuming both closings go smoothly.

If they don’t, or if you can’t find your new home that quickly, put all your nonessential belongings in storage and look for a month-to-month rental.

It will be a hassle, but it will eliminate the risk of carrying two mortgages and relieve the pressure to buy any new house instead of the right new house.

8. Putting little or no money down

If you’re putting little to nothing down — say, 3.5% with an FHA loan or 5% with a conventional loan — you’re looking at several potential problems. 

“Such loans require private mortgage insurance and provide the homeowner little or no real equity in the property,” says Bennie D. Waller, professor of finance and real estate at Longwood University in Farmville, Va.

PMI typically costs $25 to $100 per month per $100,000 borrowed. Conventional loans let you cancel PMI once you accumulate 20% equity, but FHA loans require mortgage insurance until the loan is paid in full.

Putting almost nothing down also makes it easy to end up underwater. If home values drop even slightly, you’ll be unable to move or refinance without bringing thousands of dollars to closing.

Instead of wasting money on mortgage insurance, save until you can make a 10% to 20% down payment on a conventional loan and avoid PMI or at least shorten its life.

You’ll also pay less interest over the life of your mortgage since you’re not borrowing as much.

9. Failing to get preapproved for a home loan

Educated borrowers look at their budgets and calculate how much they can afford to spend before they go house shopping.

But knowing what you can afford isn’t the same as knowing what the bank will lend you based on your income, debts, credit score and current lending conditions.

Often, consumers will go house shopping and find the perfect home before visiting a lender, says Richard Whitman, vice president of mortgage lending at Texas Trust Credit Union in north Texas. They don’t keep track of their credit and aren’t aware that it isn’t where it needs to be to qualify for a mortgage.

With no real idea of what a bank will lend you, you can’t possibly be looking at the right properties. You might be looking at better or worse homes in better or worse neighborhoods than you’ll actually be able to get a mortgage for.

Instead of playing make-believe and going window shopping, talk to at least three lenders and get preapproved. It’s free, and it enables you to make a serious offer.

This article originally appeared on Interest.com.


Article source: http://www.philly.com/philly/blogs/philadelphia-real-estate/The-9-biggest-mortgage-mistakes.html