Mortgage Rates Predictions July to Dec 2008

Today’s Mortgage Rates Interest Rates Updated Daily!

Are you a RISK when shopping for a Mortgage Loan?

Know the facts about your credit score when shopping for a new home loan, refinance loan or home equity loan.

Your credit score is a number, (usually between 300-850), used to rate how risky a borrower you are; the lower the score, the greater the risk you pose to creditors. Most mortgage and credit card lenders use credit scores when making lending decisions. A low credit score may result in a denial of credit and lenders will charge higher interest rates on loans to individuals with lower scores. This practice is known as risk-based pricing.

Individuals with high credit scores get superior interest rates to those with lower scores. And individuals with lower credit scores are often targeted with high risk-based loan programs and pay higher interest rates. For example, individuals with top credit scores might pay about 5.5 percent for a $250,000 mortgage with a monthly payment of $1,419. If extended credit at all, an individual with a credit score under 679 could pay over 15 to 30 percent for the same mortgage, carrying a monthly payment of over $1,630. Over the course of a 30-year term, that’s about $72,000 to $165,100 in extra interest!

Understanding your Credit Profile to Improve your Credit Scores.

Equifax™, Experian™, and Trans Union™ dominate the world of Credit Reporting Agencies. Each uses a different model for credit scoring. Credit scoring models are developed by analyzing statistics and picking out characteristics that are believed to relate to creditworthiness. Credit Reporting Agencies use different scoring models for different purposes. Generally, credit scores are calculated by analyzing a combination of factors including: payment history, outstanding debt, credit account history, recent inquiries, and types of credit.

The first step in managing your creditworthiness is to get a clear picture of your credit profile. Study the data from the top three credit bureaus to make sure all the information is accurate. In the event of discrepancies, send letters of dispute to the credit-reporting agency to have errors on your credit profile corrected. Also, don’t hesitate to consult your mortgage specialist who can provide guidance and if needed, refer you to credit repair specialist.

Fix and Maintain a Healthy Credit Profile

Identify problem areas on your credit profile and make a plan for improvement. For example, if you’ve had a hard time paying your bills on time, sign up for an automated payment service. If your debt levels are above 40% of your available limit, create a payment plan to reduce your balances. Set goals for improving your credit and reward yourself when you reach a milestone.

To keep your credit healthy, sign up for a Credit Monitoring service which will help you stay aware of any changes in your profile. If any disputed inaccuracies persist, contact the creditor and try to have the item eliminated from your credit profile. If you want to tell your side of the story, send a written request to the Credit Reporting Agency to have a consumer statement added to your credit file. Keep copies of your old credit profiles and letters of dispute in a safe place for future reference. Plan to evaluate your progress quarterly.

Each inquiry may reduce your credit score. However, multiple inquiries within a short amount of time, like when you are shopping for a mortgage, are grouped together to lessen the impact. The actual impact depends on the number of inquiries, time period and other factors on your credit profile.

Consolidate high interest credit card debts into one lower interest account. However, avoid combining debts onto a new credit account with a resulting balance above 40% of the available limit. Check your credit profile frequently while moving these debts to make sure that everything is being properly recorded.

Taking a proactive approach to the management of your credit profile can save you tens of thousands of dollars over the course of your lifetime. And it is never too late (or too early) to start!

Fed is Moving into Consumer Protection Role on Mortgages

Speaking at the Federal Reserve open meeting on mortgage rules, Federal Reserve Chairman Ben Bernanke said the new rules will be aimed at protecting consumers from deceptive practices.

Bernanke said that the new rules would apply to all mortgage lenders, as delinquencies and foreclosures continue to grow rapidly. Bernanke pointed to deceptive practices as the key reason for the inappropriately high cost of loans.

“It seems clear that unfair or deceptive acts and practices by lenders resulted in the extension of many loans, particularly high cost loans that were inappropriate for or misled borrowers,” Bernanke said.

The new rules ban prepayment penalties on mortgage loans whose payments can change during the first four years, and will instead be limited to the first two years.

Prepayment penalties are fees banks can charge borrowers who pay off loans earlier. This is usually done by borrowers who want to refinance a loan into one that charges less interest.

Federal Reserve Governor Randall Kroszner, in attendance at the meeting, said that the new rules alone would not be sufficient to end the crisis.

“These changes have made for better rules that will go far in protecting consumers from unfair practices and restoring confidence in our mortgage system,” said Kroszner.

By Steve Stecyk, edited by Cristina Markham
CEP Newswires – CEP News © 2008.

Mortgage News Daily

The Truth About Today’s Mortgage Loans

Here are a few ways to position yourself for approval, and for the lowest fixed mortgage rate!

 

With prices declining and supply ballooning, now is a great time to buy a home. However, lenders are scrutinizing borrowers much more carefully these days, and even with good credit, gainful employment and cash in the bank for a down payment, applying for a mortgage is more challenging today than it was just a few months ago.

 

Get a Credit Makeover. Some sins, such as unpaid tax bills, late payments or “past dues” remain on your credit report for several years, even after you’ve paid them off. But by reducing credit card balances (to 40% or less of the available credit,) and paying off any overdue amounts, you can improve your score dramatically in a relatively short period of time. Major credit restoration may require the services of a credit repair specialist.

 

Put Up or Shut Up! The more money you put down, the better your chances of securing a loan and the better the mortgage rate you will be eligible for. These days if you don’t have at least 15 to 20% of the purchase price, you may not even qualify for a loan with many institutions.

 

Show me the money! In the not-so-distant past, most lenders didn’t require you to provide proof of income. Now, you must be prepared to show your W-2 forms and, if you’re self-employed, you will need to produce several years’ tax returns. Proof of business ownership and asset verification are also part of today’s standard operating procedures.

 

Keep it real! Make sure you have money left over Stay within your budget. Don’t even allow your real estate agent to show you properties that are outside of your range. When getting pre-approved for your home loan, look for a mortgage specialist that offers options based on how much home you can actually afford. Your downside risk increases proportionately with the amount you pay and conforming loans (loans under $417,000) are easier to sell and easier to approve. Be sure to keep money aside for other investments and emergencies.

Help for Victims of Predatory Lending and Mortgage Fraud

During the past few years, many unsuspecting Americans were victimized by predatory lenders and fraudulent mortgage individuals and put into situations that have become unmanageable.  Michael Calhoun of the Center for Responsible Lending says “Families all over the country continue to lose homes in record numbers, stripping families of their wealth and destroying entire neighborhoods”

Predatory lending and mortgage fraud typically affects senior citizens, lower income and challenged credit borrowers. It forces borrowers to pay exorbitant loan origination/settlement fees, sub-prime or higher interest rates, and in some cases, unreasonable service fees. In short, these practices often result with the borrower being placed into inappropriate loans which, all too often, lead to defaulting or worse still, foreclosure.

There were 1.7 million foreclosures in the US in the first eight months of 2007, and up to 2 million families are expected to lose their homes over the next two years, according to estimates by the Joint Economic Committee.

“All around the country, aid agencies report a tidal wave of foreclosure cases”, says Sarah Gerecke, director of New York City’s Neighborhood Housing Services. She now employs six people full-time to provide mortgage debt counseling, and could use another 12. Two years ago, she had one employee.

In our research for legal resources to help victims of mortgage fraud and predatory lending, we came across a comprehensive, well put together list of mortgage fraud resources by MortgageNewsDaily.com™ that provides information and direct links available nationwide as well as state-by-state.

Report Mortgage Fraud and Identity Theft (Powered by MortgageNewsDaily.com™)

Get the Security of a Fixed Rate Mortgage! (Powered by CommunityAcceptanceMortgage.com™)

Do you think you have been a victim? Tell us your story and help us fight mortgage fraud.

Sub-Prime Affects the Innocent Homeowner

For a lot of homeowners, trouble has been brewing for some time. The sub-prime implosion triggered a widespread credit crisis, as nervous lenders tightened standards for even the best, most creditworthy borrowers. That has worsened troubles in the housing industry, contributing to flattening or falling home prices in many markets – as well as widespread layoffs in construction.
Fallout is starting to spread throughout the economy, and may be severe enough to drive the whole country into recession.

Sub-prime mortgages – exacerbate problem credit – generally intended for people with low credit scores (below 620), many lenders have stopped offering a common type of adjustable-rate mortgage, known as the 2/28 ARM.

Since mid-July 2007, five of the six biggest sub-prime mortgage lenders stopped offering 2/28 ARMs. Credit-challenged borrowers now have fewer options. “Many borrowers are not going to be able to refinance,” says Deborah Goldstein, the executive vice president of the Center for Responsible Lending.

“We think it’s a good thing for consumers,” Goldstein says, because too many 2/28 ARMs were underwritten without regard to whether borrowers could afford to repay them. “So we think it’s positive that lenders are going to stop offering that product. It does not mean they will stop offering sub-prime loans.”

A 2/28 sub-prime ARM has a low initial rate that lasts two years. After that, the rate is adjusted upward or downward. At the first jump, the rate can conceivably climb between 2 and 6 percentage points, causing monthly payments to skyrocket. (In practice, the first rate jump is usually on the smaller end of that scale, but it can keep rising every six or 12 months afterwards.)
When should I refinance? Borrowers who need to refinance their sub-prime mortgages still have options. Some lenders still offer 2/28 and 3/27 ARMs, although the rates might be into the double digits.

And some lenders offer 5/25 ARMs and 30- and 40-year fixed-rate sub-prime mortgages. In addition, there are “expanded approval” loan programs, which allow lenders to offer Federal National Mortgage Association (Fannie Mae)-approved loans to people with blemished credit, but in such cases borrowers will now have to document their incomes, pay principal as well as interest, and, in most cases, pay mortgage insurance.

Is there a light at the end of the tunnel? Homeownership may continue down its windy slope for a while so whatever you do, get expert advice and choose a licensed broker you can trust. He /she will listen carefully to your needs and get you the best rates available while providing you with the facts and helpful advice about your mortgage or refinancing needs.