Monday, March 30, 2015

Tips on scoring the best rate on a home loan

Mortgage interest rates have hovered near historic lows in recent years, but change may be on the horizon.

The Federal Reserve is considering increasing the short-term interest rate it controls as early as June. That could send mortgage rates moving higher again.

For now, rates remain homebuyer-friendly. The national average rate for a 30-year, fixed mortgage fell to 3.75 percent recently. It was 4.28 percent a year ago.

That’s good news for homebuyers, who despite signs that the economy is recovering, are always looking for ways to save.

Still, landing the most affordable mortgage depends on more than getting the lowest rate. The rate borrowers qualify for hinges on several factors, including their finances, credit score and the size of the down payment they’re prepared to make. And the type of loan and the fees that come with it also determine the overall cost of a mortgage.

“As rates go up it will affect affordability,” said Greg McBride, chief financial analyst at “But rate is not going to be your only loan consideration. You don’t buy a house because of low interest rates any more than you get married because of a sale at the bridal shop.”

Here are some tips on how to get the best deal on a mortgage:

Size up your credit: Mortgage lenders consider three key factors to determine what rate they can offer a borrower: Good credit, proof of income and size of the down payment. Strength in one category can offset a deficiency in another, but having a FICO score of 740 or better out of 850 will generally qualify borrowers for the lowest mortgage rate.

You can qualify for a home loan with a lower credit score, but you’ll pay a higher interest rate.

If your FICO is below 740, review copies of your credit files for errors that may be weighing down your score. Consumers are entitled to a free credit report every 12 months from the three major credit-reporting firms — Equifax, TransUnion and Experian. Go to

The credit firms are required to respond to error disputes within 30 days, so it pays to do this well in advance of when you intend to buy a home. Think at least six to eight weeks.

The ratio between available credit and how much debt you’re carrying is another key element of the FICO score. A good rule of thumb is to keep debt at less than half of your available credit. Reducing that ratio alone can often bump up your score.

Shop around: Before you begin your home search, ask a lender to assess how much you can borrow. The lender will conduct a thorough credit and income review and issue you a pre-approval letter, which will give a seller solid indication of what you can spend.

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Friday, March 27, 2015

Tennis - Caroline Wozniacki sails into third round in Miami

The Danish world number five secured a 6-0 6-1 victory inside an hour, saving both of the break points she faced.

[STORY: Rory McIlroy split was like someone dying, says Caroline Wozniacki]

Seventh seed Agnieszka Radwanska, the 2012 champion, also progressed with 6-4 7-5 win over Anna Schmiedlova.

"I was in trouble, especially in that second set," said Radwanska. "But what was most important is that I was really playing good shots in the really key points, in the break points.

"I'm very glad that I could finish in two sets," she said.

Elsewhere, Russia's Ekaterina Makarova beat Karin Knapp 6-1 6-3 and Germany's Andrea Petkovic ousted Christina McHale in a 6-2 6-2 win.

Results from the Miami Women's Singles Round 2 matches on Thursday

26-Elina Svitolina (Ukraine) beat Bojana Jovanovski (Serbia) 6-3 7-6(3)

8-Ekaterina Makarova (Russia) beat Karin Knapp (Italy) 6-1 6-3

4-Caroline Wozniacki (Denmark) beat Madison Brengle (U.S.) 6-0 6-1

22-Alize Cornet (France) beat Elena Vesnina (Russia) 6-4 6-1

Kaia Kanepi (Estonia) beat 28-Varvara Lepchenko (U.S.) 6-2 6-4

Kristina Mladenovic (France) beat 19-Barbora Zahlavova Strycova (Czech Republic) 7-5 6-2

9-Andrea Petkovic (Germany) beat Christina Mchale (U.S.) 6-2 6-2

14-Karolina Pliskova (Czech Republic) beat Annika Beck (Germany) 2-6 6-3 6-4

12-Carla Suarez Navarro (Spain) beat Stefanie Voegele (Switzerland) 6-3 6-1

31-Irina Begu (Romania) beat Tereza Smitkova (Czech Republic) 5-7 6-4 6-4

7-Agnieszka Radwanska (Poland) beat Anna Karolina Schmiedlova (Slovakia) 6-4 7-5

Paula Badosa (Spain) beat Zheng Saisai (China) 6-1 7-5

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Wednesday, March 25, 2015

Why the Supreme Court Might Actually Rule Against the Corporate Interest

King v. Burwell isn't the only Supreme Court case this term that will determine the fate of millions of poor and vulnerable Americans. Bank of America v. Caulkett, to be heard Tuesday, is a technical case about the bankruptcy code, but if the bank succeeds, it would make it more difficult for people to start over when debt burdens become unmanageable. “It will affect many people’s pocketbooks,” said Bob Lawless, bankruptcy law professor at the University of Illinois.

The Caulkett case has a link to the foreclosure crisis. Under current law, primary residence mortgages cannot be modified in bankruptcy, unlike vacation homes, yachts, car leases, and almost every other form of debt, with the notable exception of student loans. That’s because of a 1992 Supreme Court case called Dewsnup, which barred bankruptcy judges from stripping down an underwater first mortgage to its market value. Liberals wanted the bankruptcy “cram-down” option available to prevent a flood of foreclosures, but a bill to change the law failed in the Senate in 2009. As Dick Durbin famously said, the banks "frankly own the place.”

In Caulkett we’ll see if they own the Supreme Court too, and if they can extend that prohibition on modifying primary mortgages in bankruptcy to a prohibition on extinguishing second mortgages in one part of the bankruptcy code. Second mortgages, often home equity loans, use the home as collateral, but the secured claim is junior to the first mortgage. So if the house is worth $200,000, and the first mortgage is owed $250,000—a phenomenon known as an “underwater” home—that second mortgage will receive no money in a foreclosure sale.

Right now, in a Chapter 13 bankruptcy, you can “strip off” a second mortgage on an underwater home, but you weren’t allowed to do it in a Chapter 7 bankruptcy. The 11th Circuit Court of Appeals, using an old case in its circuit as precedent, said that stripping off the second mortgage was allowed under Chapter 7, and did so for Mr. David Caulkett of Melbourne, Florida.

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Monday, March 23, 2015

Alabama ranked 12th in nation for delinquent mortgages

HUNTSVILLE, Ala. (WAAY) A recent study by Corelogic, a  global property information and analytic provider says Alabama is ranked 12th in the nation for delinquent mortgages.

The report goes on to say that nations overall foreclosure rate is down 33% percent. While that number is falling, there are still several states that have an overwhelming amount of foreclosures annually. The top five include Florida, Michigan, Texas, California and Georgia.

Experts say in some cases, people aren't prepared for home ownership and the maintenance that comes with owning a home. A few of the top causes for families falling into foreclosure are job loss, illness and divorce.

If something happens and you believe your home may go delinquent, experts say talking with your lender is the first step. Your lender will discuss what options you have as a homeowner. "They're afraid to tell the lender their financial situation. You really have to be honest with them. I've lost my job, my wife left me or whatever it is that has caused you to be in the situation," says Diane Korb with Home Mortgage of America in Madison.

Korb suggest weighing your options first since lenders will do everything they can to keep you in your home. Just because your situation doesn't pan out the way you might expect it too, it's never too late to start over. "If you do have a foreclosure, it's not the end of the world. There's a three year waiting period for FHA and a four year waiting period on conventional loans. So, you just need to re-establish your credit and you can purchase again," added Korb.

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Wednesday, March 18, 2015

The Truth About Reverse Mortgages

ou’ve seen the ubiquitous TV ads, the ones with mature celebrities Pat Boone, Robert Wagner, Henry “Fonzie” Winkler and Fred Thompson extolling the virtues of a reverse mortgage for homeowners 62 and older.

Thompson, the avuncular television and movie actor and former US Senator and Republican presidential candidate, assures you that, with this “government-insured, tax-free and safe loan,” you can take cash out of your home, have no monthly payments and still own your home.

It’s not only that simple, he infers; it’s the yellow brick road to a financially carefree retirement.

“There’s got to be a catch, right?” asks the pitchman for AAG Insurance Company while staring directly into the camera. “Well, there isn’t.”

Umm … not so fast, Fred.

It turns out that, for some, a reverse mortgage can be much more of a risk than a remedy.

“The closing costs are very exorbitant and there are no two ways around that,” says Paul McLaughlin, who manages the home ownership and counseling education program at NeighborWorks of Southern New Hampshire’s Home Team, which is a collaborative of three agencies including CATCH Neighborhood Housing in Concord and the Area Community Land Trust in Laconia.

“The way that [these insurance companies] lure people in is by saying that they’re not paying these costs out of their pocket. The philosophy is that someday you’re going to die and somebody else will pay it off when they sell the house. Luckily, we don’t always die, and then it’s a lot of tearing into your earned equity,” McLaughlin says.

Nevertheless, with more federal regulations and protections put into place in the past few years, this type of loan is increasingly popular with seniors who want to supplement their income or use their home’s equity now.

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Tuesday, March 17, 2015

Fiscal health of local homebuyers improves slightly in Q4

The financial health of Lancaster County homebuyers got slightly better in the fourth quarter, a new report shows.

Some 5.2 percent of residential mortgage borrowers, or 5,335, were “under water” in the fourth quarter, data firm CoreLogic said Tuesday.

That was fewer than the 5.3 percent, or 5,395 borrowers, with that status here in 2013’s fourth quarter, according to CoreLogic.

But viewed over a longer period, the new figure represents a significant improvement.

In 2011’s fourth quarter, for instance, some 8.0 percent of homebuyers here, or 8,090, were under water.

The same trend occurred nationally.

Some 5.4 million, or 10.8 percent of all U.S. residential mortgage borrowers, had negative equity in the fourth quarter. That was down from 6.6 million, or 13.4 percent, reported in 2013’s fourth quarter.

A mortgage borrower is deemed “under water” or “upside down” when he owes more on a home than the home is worth. This condition, formally known as negative equity, can occur because of a decline in home value, an increase in mortgage debt or both.

The number of local mortgage borrowers on the brink of going under water also improved in the fourth quarter from 2013’s fourth quarter, said CoreLogic.

Some 3.0 percent, or 3,100 residential mortgage borrowers, were in near negative equity in the fourth quarter. That compared to 3.1 percent, or 3,173 borrowers, in 2013’s fourth quarter.

Borrowers in this condition, defined as having less than 5 percent equity in their home, are deemed at risk of slipping into negative equity if home prices fall.

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Monday, March 16, 2015

Reverse Mortgages May be Excluded from ‘Rapid’ Home Loan Expansion

Access to home loans now is approaching pre-recession levels as mortgage lenders rapidly loosen requirements, although reverse mortgage lenders continue to be limited by government regulation, a top researcher at real estate website Zillow tells RMD.

Zillow on Friday released the first-ever Zillow Mortgage Access Index (ZMAI), showing the notable trend toward loosening credit. The index weighs seven variables, including the lowest 10th percentile of mortgage borrower credit scores and the percentage of non-conforming loans, and comprises data going back to 2002.

“While we aren’t directly taking reserve mortgages into account, the increased availability of mortgage credit more generally can be good news for reverse mortgage availability as well,” states Svenja Gudell, Zillow’s senior director of economic research, in an email to RMD.

However, Gudell notes that government regulations in the reverse mortgage market may “swamp out” the effects of more accessible credit.

Credit significantly tightened after the housing and financial collapse of 2007, but now access to mortgage credit has bounced back and is two-thirds of the way to 2002 levels, the Zillow index shows.

The trend of steadily loosening access to mortgage credit began in 2013, and no slow-down appears imminent, according to Zillow.

“The reality of what borrowers are experiencing in the mortgage market does not match the popular narrative,” stated Stan Humphries, Zillow’s chief economist, in a press release. “Lenders are, in fact, opening their doors a bit wider, especially for borrowers with credit scores below 700.”

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Thursday, March 12, 2015

When You Should (and Shouldn’t) Get a Reverse Mortgage

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When You Should (and Shouldn’t) Get a Reverse Mortgage
by MJ Knoblock on March 2, 2015 | posted in Library - Mortgages, Mortgages
You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved. Here's how we make money.

There’s comfort in owning a home, especially when you’ve lived there for many years. Reverse mortgages are a special kind of home equity loan designed to help you stay in your home in your senior years while providing you with cash for living expenses.
How reverse mortgages work

You must be at least 62 years old to qualify. As with a traditional home equity loan, your ability to borrow hinges on the equity value you’ve built up in the property. The more equity you have, the lower the interest rate on what you borrow. You can choose to receive the loan as a lump sum, a fixed monthly payout or a line of credit that lets you draw out money as needed. Unlike a traditional home equity loan, a reverse mortgage comes without a credit check. This is balanced with additional upfront fees, as well as interest.

You don’t have to repay the loan for as long as you live in your home. You repay when you move out. If you die while still living in the home, your heirs must repay the loan. In either case, the loan is usually repaid simply by selling the home. According to the Consumer Financial Protection Bureau, neither you nor your heirs will have to repay more than the home is worth.

The main advantage is the extra money it puts in your pocket. This can be used to pay off debt or live more comfortably. Reverse mortgages work for a wide range of needs. They offer wiggle room for those living on fixed incomes, covering unexpected medical bills or traveling. If you hope to stay in your home for several more years, a reverse mortgage can help you make it happen.

Property taxes and insurance remain your responsibility; you can lose your home if you fail to pay these costs, as the lender can foreclose. If you start taking out money too early, you may run out of equity unless your home’s value increases substantially. The loan principal and interest continue to grow until you pay off what you’ve borrowed or sell the home. Finally, a reverse mortgage may make it impossible to pass the home to your heirs, if neither you nor they have the resources to pay off the loan without selling the property.

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Wednesday, March 11, 2015

Mortgage applications slip slightly in first week of March

 Mortgage applications decreased 1.3% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending March 6, 2015.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1% compared with the previous week. The Refinance Index decreased 3% from the previous week to the lowest level since January 2015.

The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index increased 3% compared with the previous week and was 2% higher than the same week one year ago.

The refinance share of mortgage activity decreased to 60% of total applications from 62% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.6% of total applications. The average loan size for purchase applications increased to the highest level in the history of the survey at $294,900.

The FHA share of total applications decreased to 14% this week from 14.6% last week. The VA share of total applications increased to 10.8% this week from 9.8% last week. The USDA share of total applications remained unchanged from last week at 0.8%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.01%, the highest level since the week ending Jan. 2, 2015, from 3.96%, with points increasing to 0.39 from 0.30 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.02% from 3.95%, with points remaining unchanged at 0.27 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

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Monday, March 9, 2015

American Refinancing Boom Seen Fizzling, Bonds Show: Mortgages

 (Bloomberg) -- The great American refinancing boom of 2015 is turning out to be greatly exaggerated.

In January, concern mounted among U.S. mortgage-bond holders that homeowner refinancing was about to soar, decreasing the value of their securities. Their worries were short-lived. Last month, premiums fell on bonds backed by loans unlikely to refinance. That means investors saw less need for protection against the risk borrowers would repay their mortgages early.

The drop in interest rates that helped fuel a January surge in refinancing applications has reversed, with the cost of a 30-year mortgage rising 6 percent over the past three weeks from a 20-month low. That sparked higher demand in the $5.6 trillion market for government-backed mortgage bonds, and refinancing levels are expected to stay low for the foreseeable future.

When rates rise, “the prepayment concern is not all that relevant,” said David Land, a bond manager at St. Paul, Minnesota-based Advantus Capital Management Inc., which oversees about $33 billion.

While the bond market celebrates, it’s bad news for lenders, homeowners and companies hoping for an economic boost from consumers with more cash to spend each month.

Total mortgage production, for purchases and refinancing, will probably total about $1.2 trillion this year, and the same in 2016, Kevin Watters, head of JPMorgan Chase & Co.’s mortgage unit, said last week during the bank’s investor day.
2014 Originations

Last year, mortgage originations tumbled 34 percent to a 13-year low of $1.24 trillion, with refinancings accounting for 42 percent of the total, down from 64 percent in 2013, according to newsletter Inside Mortgage Finance.

With the flurry of activity at the start of this year now passed, lenders will have to focus more on loans for purchase. Refinancing applications, which had soared 84 percent in the final three weeks of January from their 2014 average, according to Mortgage Bankers Association data, have subsequently fallen 30 percent.

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Thursday, March 5, 2015

6 Steps to Get the Best Mortgage Rates This Spring

If you've got the itch to ditch your landlord and take the leap to homeownership, mortgage rates are still low by historical standards. But beware because they are expected to begin creeping higher throughout the year.

"The cost of renting is really high right now. Rents have been rising and rising," says Lawrence Yun, chief economist at the National Association of Realtors. "Renters are getting squeezed, and some want to convert to ownership.".

The NAR expects 30-year, fixed-rate mortgages to average 3.80 percent in the first quarter. However, mortgage rates are forecast to start inching higher throughout the year. The NAR forecasts an average 4 percent rate in the second quarter, 4.3 percent in the third quarter and 4.7 percent in the fourth quarter.

Economic forces, including an improving U.S. labor market and faster economic growth, are conspiring to push mortgage rates higher this year. "The Federal Reserve is likely to raise short-term interest rates in the summer, which will be a signal for the rest of the market for rates to go higher," Yun says.

"There's a window of opportunity for buying and refinancing at crazy-low rates, but it's closing," says Gina Pogol, loan expert at Charlotte, North Carolina-based LendingTree.

If this is the year you want to sign on the dotted line and become a homeowner, experts have several suggestions to help you move quickly through the mortgage approval process.

The overall lending environment remains stringent, and the best mortgage rates will be awarded to those with higher credit scores. Your credit score is a three-digit number generated using information on your credit report, and generally, the higher it is, the better. Here's what you need to do to get the best rates.

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Tuesday, March 3, 2015

Mortgage: These seniors chose reverse mortgages

Mike Ryan liked what a reverse mortgage could give him: the ability to take equity out of the house, tax free and with no monthly payments. But he was skeptical, too. He thought about it for two years.

Then, Beth Paterson, executive vice president at Reverse Mortgages SIDAC, a division of Greenleaf Financial, in St. Paul, Minnesota, told Ryan he could sell his current home and use a reverse mortgage to buy a new home.

With that in mind, he was sold.

Reverse mortgage

A home equity loan in which the borrower is not required to make payments. The homeowner must be at least 62 years old. A reverse mortgage accrues interest and does not have to be repaid until the homeowner dies or moves out of the house. The Federal Housing Administration calls it a HECM, for home equity conversion mortgage.

A long climb from the garage

At the time, in mid-2013, Ryan and his wife lived in a home with a tucked-under garage and 15-step staircase to the main level.

"We wanted a single level so my wife didn't have to traverse steps up and down. Every time we went to get groceries, we had to bring them up the 15 steps and vice versa," he said.

New home

The reverse mortgage paid off an existing loan on that home and, combined with the equity from the sale, enabled the Ryans to buy their new residence.

"The old house sold for $240,000," Ryan said, "and that afforded me enough to actually put a few bucks in my pocket at the end of the day."

The Ryans' new home, bought for $400,000 in November 2013, also has two levels, but the main living area is on the first level, just two steps up from the garage. The lower level is a walk-out basement that contains storage space and a guest bedroom.

No worries

The up-front fees and interest costs were "one of the drawbacks," Ryan said, but he adds that he and his wife had no concerns about using their home equity.

"We're the perfect candidates for a reverse mortgage because there's no one for us to be leaving our money to," he said. "The idea is: Why shouldn't I enjoy the fruits of my labor when I was younger in my old age if it makes it a little easier for me? It's the perfect tool."

So far, Ryan said, he has no regrets about the reverse mortgage, although it was difficult to move out of the home where he and his wife had lived 38 years.

"The net result of having a reverse mortgage is that there are no more payments for you to make and you can live there until the last one of the two of you expires," he said. "The beauty of it is you have a nice new house with no payments."

Reverse and repeat

DeAnna Manley, 71, believes so strongly in the benefits of reverse mortgages that she's taken out not just one or two, but three reverse mortgages, and she wouldn't hesitate to go for a fourth if she could.

"It's a wonderful option," Manley said.

Manley inherited her home in San Diego from her mother in 2010 and got her first reverse mortgage of about $200,000 that year. She said she used the money to pay off an existing $135,000 loan and "completely gut and remodel the house."

Cash out

The house then appreciated in value, giving Manley the opportunity to obtain her second and third reverse mortgages, all from Eric Meehan, owner/broker of Golden Opportunity Reverse Mortgage in San Diego.

Those mortgages netted Manley a combined total of about $60,000 in 2011 and 2013. An appraisal in 2012 wasn't high enough for her to get a new reverse mortgage that year.

"After I modernized the house, the value went up a lot," Manley said, "so I did another reverse mortgage based on the new value. That got me back the same $60,000 that I had already gotten and spent."

That sum is now invested in the financial markets to supplement her retirement savings.

Paying off a mortgage with a reverse

Robert is married to Linda, who is 62 and is the younger spouse. Their house is worth $200,000 and they owe $62,000 on the mortgage.

Based on their ages and the home's value, they can get a reverse mortgage for up to about $104,800. This is known as the principal limit or maximum loan amount. Closing costs, including FHA initial mortgage insurance, reduce that available amount to about $93,800.

Under FHA rules, the amount they borrow is limited in the first year. Borrowing the $62,000 to pay off the mortgage, they can take out another $10,400 in cash during the first year. A year later, the remainder is available to them.

Barbara is a 75-year-old widow with a house worth $400,000. She owes $25,000 on a home equity line of credit, with no other mortgage debt.

Based on her age and the home's value, she can get a reverse mortgage for up to about $245,600 (the principal limit). Closing costs, including FHA initial mortgage insurance, reduce the available amount to around $234,900.

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