Jim Clooney Blog Page - Jim Clooney Org

Consumers Are Back to Paying Mortgages Ahead of Credit Cards

5/27/2014

Americans are putting their mortgages ahead of their credit cards when they pay the bills, reversing an unusual pattern that had developed after the housing bust.

As home values plunged during the downturn, consumers began to default on their mortgages while continuing to make credit card payments, according to research from TransUnion, reversing a long-standing hierarchy in which lenders expected mortgages to be paid first.

New data from the credit-reporting firm reveal that the normal payment hierarchy returned at the end of last year, following around two years of rising home values. “People are paying their mortgages again ahead of their bank card,” said Steven Chaouki, a financial-services executive at TransUnion, though the payment relationship hasn’t returned entirely to pre-crisis levels.

The data also show that before, during and after the crisis, Americans are most likely to make their car payments first.

read more: http://blogs.wsj.com/economics/2014/05/27/consumers-are-back-to-paying-mortgages-ahead-of-credit-cards/

New mortgage rules shouldn’t affect most seeking a home loan in 2014

1/17/2014

Kurgan-Bergen Realtors in Rutherford provides the following information.

You may have heard about recent changes to mortgage lending rules that could make obtaining financing more difficult. Well, breathe easier potential homeowners, because these changes really shouldn't affect you much.

The new rules aren't really new. Lenders have known of and prepared for them for some time now. Most have already adjusted their policies accordingly so that you won't see much change at all going into the new year. In fact, Richard Cordray, the director of the Consumer Financial Protection Bureau who is making the rule changes, said approximately 95 percent of the loans currently being made would fit the new criteria.

The change that would have had the most direct impact on a borrowers ability to qualify is the imposition of a maximum 43 percent "debt to income" ratio.

This limits the percentage of a borrowers monthly gross income that can be used towards the payment of mortgage principal and interest, real estate taxes, homeowners insurance, mortgage insurance and consumer debt to 43 percent.

Existing policy varies from lender to lender but is generally capped at 45 percent on a "conventional" loan and can go as high as 50 percent on an FHA/HUD insured loan. However, this particular rule change isn't scheduled to go into effect until 2021.

source: http://www.northjersey.com/community/announcements/240412501_New_mortgage_rules_shouldn_t_affect_most_seeking_a_home_loan_in_2014.html
Follow me:

Why Credit Scores Dropped on New Mortgages in 2013

1/16/2014

30 and 15 year mortgage interest rates rise up; Freddie Mac data and pending home sales review today

1/6/2014

Housing Sector news review 2013 and mortgage rate trends 2014:
According to the National Association of Realtors, pending home sales in November moved slightly higher. The news was well received and taken as a sign of additional stability for the U.S. economy which is still in the recovery process.
Specifically, pending home sales in November inched higher by .2 percent to 101.7 from the downwardly revised 101.5 which posted in October. The pending home sales data represents contract signings in the sector. The index rise reveals that economic confidence is rising and that future sector data should be positively skewed. Economists analyze the data and anticipate that sector activity will be subdued somewhat, yet stable.
Gains in 2014 will be held in check due to rising home prices and rising mortgage interest rates. The economy is improving and with improving economic trends, mortgage rates and home prices are expected to track higher throughout 2014.
Mortgage interest rates notched higher in the latest week. According to Freddie Mac, mortgage interest rates for the standard 30 and 15 year fixed mortgage plans climbed higher once again.
Mortgage rates for 15 and 30 year fixed plans today January 5, 2014:
According to Freddie Mac, the interest rate for the standard 30 year fixed plan rose to 4.53 percent. The average interest rate for the standard 15 year plan rose to 3.55 percent last week.

Source: http://www.learningandfinance.com/2014/01/05/30-and-15-year-mortgage-interest-rates-rise-up-freddie-mac-data-and-pending-home-sales-review-today/
Follow me:

Fixed Mortgage Rates Move Higher

12/6/2013

Average interest rates on fixed-rate mortgages jumped higher this week according to Freddie Mac’s Primary Mortgage Market Survey® (PMMS) for the week ending December 5th, 2013.

Fixed Rate Mortgages:

Interest rates on fixed rate mortgages pushed higher this week with the 30-year fixed rate mortgage increasing by seventeen basis points to an average of 4.46 percent with an average of 0.5 points. Last week the average rate increased by seven basis points. A year ago, the 30-year fixed rate mortgage averaged 3.34 percent.

Average 30-year fixed rates were generally the lowest in the Southeastern portion of the United States where mortgage rates averaged 4.43 percent while the highest rates were reported in the North Central area of the country where interest rates averaged 4.50 percent.

The average rate for a 15-year fixed mortgage was 3.47 percent this week with an average of 0.4 points, up from an average of 3.30 percent last week. At this time last year, the 15-year fixed rate mortgage averaged 2.67 percent.

Adjustable Rate Mortgages:

Interest rates for adjustable-rate mortgages were mixed this week with the 5-year Treasury-indexed hybrid ARM averaging 2.99 percent, with an average of 0.4 points, up from an average of 2.94 percent last week. The 5-year adjustable rate mortgage averaged 2.69 percent a year earlier.

The 1-year Treasury-indexed adjustable rate mortgage averaged 2.59 percent with an average of 0.4 points, down slightly from an average of 2.60 percent last week. A year ago, the 1-year adjustable rate mortgage averaged 2.55 percent.

Source: http://loanrateupdate.com/mortgages/fixed-mortgage-rates-move-higher

Follow me:

Average mortgage rates rise modestly

11/28/2013

WASHINGTON – Average U.S. mortgage rates rose modestly this week, a move that makes home-buying a bit less affordable. Still, rates remain near historically low levels.

Mortgage buyer Freddie Mac said Wednesday that the average rate on the 30-year loan increased to 4.29 percent from 4.22 percent last week. The average on the 15-year fixed ticked up to 3.3 percent from 3.27 percent.

Rates have risen nearly a full percentage point since May after the Federal Reserve signaled it might slow its bond purchases by the end of the year. Rates peaked at nearly 4.6 percent in August. But the Fed held off in September and most analysts expect it won’t move until next year.

The increase in mortgage rates has contributed to a slowdown in home sales over the past two months.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’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 a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan also was unchanged at 0.7 point.

The average rate on a one-year adjustable-rate mortgage edged down to 2.60 percent, from 2.61 percent last week. The fee was unchanged at 0.4 point.

The average rate on a five-year adjustable mortgage edged down to 2.94 percent this week, from 2.95 percent last week. The fee was unchanged at 0.5 point.

Source: http://www.buffalonews.com/business/average-mortgage-rates-rise-modestly-20131127

Follow me:

New, tough rules for mortgages begin in Jan. 2014

11/19/2013

Rich people are getting mortgages cheaper than you

11/12/2013

Rich homebuyers can now get mortgages cheaper than pretty much everyone else.

In an unusual twist, lenders are offering rates on jumbo mortgages that are more than a quarter of a percentage point lower than those on the conforming loans backed by Fannie Mae and Freddie Mac. The government-run agencies require conforming loans to be below $417,000, unless they are for homes in high-cost areas like New York or Los Angeles,where the limit is $625,500.

Jumbo loans exceed those dollar limits and, historically, banks charge higher rates on them -- about 0.25 percentage points more -- than they do for conforming loans, according to the Mortgage Bankers Association. But over the past couple of months, the tables have turned.

This week, Wells Fargo (WFC, Fortune 500) advertised a 30-year jumbo mortgage at a rate of 4.125%, significantly lower than the 4.5% rate it is offering for a 30-year, fixed-rate conforming loan. US Bank (USB, Fortune 500) is offering a jumbo for 3.875% this week compared with 4.25% for a conforming loan. And Chase's (JPM, Fortune 500) jumbos have been running a quarter of a percentage point below conventional mortgages, as have TD Bank's (TD).

"Never in my memory have jumbos been such a bargain," said Peter Grabel, a loan officer at Luxury Mortgage Corp. in Stamford, Ct., with 13 years on the job.

One big reason jumbo rates are so low is because lenders want to attract wealthy clients and hang on to them, said Malcolm Hollensteiner, head of consumer lending for TD Bank. Once clients sign up for a mortgage, the bank can "cross sell them other products, like brokerage services," he said.

That works especially well in these days of strict underwriting standards, according to Keith Gumbinger, a mortgage expert with HSH.com.

"Borrowers have to open up their whole financial picture to lenders," he said. "They can see where there's value, which they might be able to sell against."

Once a wealthy client takes out one of these low-rate loans, they are likely to stick around. "With rates as low as they are, borrowers are never going to refinance the loans. Those affluent clients will stay on the bank's books forever," said Gumbinger.

Jumbo loans have also gotten comparatively cheaper. As the Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, seeks to boost the two agencies' reserves against losses from mortgage defaults, it has raised fees and other costs for borrowers, according to Terry Francisco, a Bank of America spokesman.

Since Fannie and Freddie don't back jumbo mortgages, those fees don't apply and therefore aren't passed on to borrowers.

Read More: http://money.cnn.com/2013/11/12/real_estate/jumbo-mortgages/
Follow me:

Five Questions to Decide Between a 15- and 30-Year Mortgage

11/8/2013

It has been a slow and painful process, but the housing market is now in recovery and foreclosures have been dropping. Since the housing bust, regulators have focused on preventing borrowers from entering into potentially toxic loans. To help accomplish this, the U.S. government established the Consumer Financial Protection Bureau (CFPB) in 2010.

As part of this effort, the CFPB has proposed new disclosure forms to help borrowers understand the real risks and costs associated with their mortgage. But many potential borrowers are still unsure about the type of mortgage that is right for them. Many borrowers may be attracted to 15-year mortgages, which have a shorter term and lower interest rates than 30-year mortgages. But such a mortgage may not be right for their needs.

Despite the rise in popularity of the 15-year mortgage, it is not necessarily for everyone. For borrowers, it is important to get as much information about the different common mortgages institutions offer — and to understand the different terms. While the amount being borrowed, or principal of the loan, is often clear, the cost of the loan, or interest rate, is often less so.

In an interview with 24/7 Wall St., Guy Cecala, publisher of Inside Mortgage Finance, said borrowing to buy a home is a more complicated decision than refinancing. It is “much more of a calculation about what you can afford, how secure you are about your job, what’s the likelihood you’re going to want to move in less than five years.”

Borrowers must understand how payments, which consist of principal repayment and interest, will be structured under the different types of mortgages. They need to consider how much they will be paying for the loan, not just now, but in the future as well. And they should also consider their budget, age and other factors before deciding on a mortgage.

1. Can you afford to pay off the mortgage in 15 years?

Although a 15-year mortgage offers a lower rate relative to a 30-year mortgage, thereby allowing borrowers to pay interest for only half as long, a 15-year mortgage comes with a higher total monthly payment. This is because the principal must be paid off faster, making each principal payment larger.

Because borrowers pay down the principal balance faster, in the longer run they save on interest payments. Inside Mortgage Finance publisher Guy Cecala noted, “if you can afford the higher payments associated with the shorter-term 15-year mortgage, there is no reason not to take one.”

However, because the monthly payments are higher, it can strain borrowers’ ability to set aside money for retirement or their kids’ college tuition. These borrowers may be better-off with a 30-year mortgage. Similarly, if the higher payments of a 15-year mortgage mean borrowers have less money to invest elsewhere and diversify their portfolios, they may be better off with a 30-year mortgage.

2. Are you buying your first home?

First-time home buyers often benefit from selecting a 30-year mortgage because the monthly payments are lower. A longer-term mortgage can make a more expensive home more affordable for a new buyer. According to Cecala, most first-time home buyers “are trying to get in as much house as they can.”

Of course, 15-year and 30-year mortgages are not the only options available to consumers. Borrowers can take an adjustable-rate mortgage, which offers a low initial rate that stays unchanged for some period, such as five years. When the period expires, borrowers could pay more if interest rates rise. But for buyers who are not looking to own their home for too long and who are confident that they will be able to resell the home, an adjustable rate mortgage may be a sensible option.

3. Are you looking to refinance?

If you already have a mortgage and would like to refinance, now may be a good time. Cecala noted that if your current payments on a 30-year mortgage are high enough, you might be able to refinance into a 15-year mortgage and make similar monthly payments while shortening your mortgage term.

An additional factor that may make refinancing more attractive is the current difference, or spread, between interest rates on 15-year and 30-year mortgages. According to Cecala, “historically, the difference between the 30-year fixed rate and the 15-year fixed rate has been about 25 basis points,” or about 0.25%. Currently, the spread between the two rates is especially large, at close to 1% in some cases.

4. Are you planning on retiring soon?

How close a borrower is to retiring plays a major role in whether to take out a 15-year mortgage. Typically, borrowers who take 15-year mortgages are at least 40 years old, according to Cecala. These borrowers are often willing to pay off the balance on their mortgages faster in order to retire with little or no outstanding debt on their homes. However, many older homeowners also must weigh prepayment — making early payments on their mortgage — against the need to save for retirement. According to the CFPB, 30% of homeowners aged 70 and older have outstanding mortgages.

5. Do you have a strict savings plan?

Choosing a 15-year mortgage over a 30-year mortgage also may be a worthwhile choice if you are not a disciplined saver. But many people may lack the discipline needed to save long-term, Cecala noted, especially in amounts that would offset what they would save by switching to a 15-year mortgage. He also added that “a lot of times people need that extra money for something else,” and so they choose to keep their money in a 30-year mortgage with lower individual monthly payments.

Some truly disciplined savers may actually benefit from carrying their mortgages into retirement. According to a May story published by Time magazine: “if you expect to earn more after tax on your investments than you pay after tax on your mortgage, keep the mortgage.” What you want to avoid in retirement, however, is a situation where you are juggling a mortgage on top of your basic costs of living, taxes and health care payments.

Source: http://247wallst.com/special-report/2013/11/07/five-questions-to-decide-between-a-15-and-30-year-mortgage/2/

Follow me:

Banks announce new loan structure for home buyers

11/6/2013

CHARLOTTE, N.C. --

Banks like Wells Fargo and Bank of America announced new loan structures that will allow a buyer to purchase a home with as little as 5 percent down.

The announcement came on the same day new housing numbers were released that showed the smallest gains in home prices since January; in Charlotte, house prices only rose 7.1 percent.

Experts say the combination of new loan structures and stabilizing home prices are good for buyers and sellers alike.

"We are still seeing price increases but not increasing so high as to take away that buyers' buying power," said home builder Bill Saint.

A former CPA, Saint builds custom homes and works with consumers on both sides of the buying and selling processes.

Saint said while the new loan terms will be attractive to buyers, they still must qualify under stringent restrictions that are far different than those before the housing market collapsed.

"The banks are doing the due diligence on that individual...if you've gone through the re-fi process or a new loan process, you realize it has to be a real loan," Saint said.

Experts predict the rise in housing prices will continue to decline when the October numbers are released.

Source: http://www.wsoctv.com/news/news/local/banks-announce-new-loan-structure-home-buyers/nbjB9/

Follow me: