For your new financing you need a
mortgage professional, preferably a mortgage broker, as opposed to a direct lender. You may
ask why? Mortgage Brokers have many opportunities and many, many
different programs and many different direct lenders that they work
with. Brokers have access to all types of loan programs for all
types of people, including bad credit loans.
When you start shopping for you
home loan find and interview at least 3 brokers. You may use any
company that you might have heard of, such as companies advertising
on a radio, TV etc... They key is to find a teammate, someone
that you will work with, someone that you are willing to share your
personal information with, someone that you willing to complete the
transaction with to get you your loan.
When you find a mortgage broker
that you are comfortable with, you need to interview him or her.
Just like any other job, such as contractor etc. You are hiring and
ultimately will pay a broker to help you with your loan. Fees for
the broker are usually enrolled in your loan amount. You want to
know who they are, what they do, how they do it and what it will
cost.
Some questions to ask:
-What kind of loan programs they
might have available, specifically if you are a first time home
buyer, what types of loans they have for first time buyers?
-How many points the charge for
the loan?
-Why should I choose you, instead
of competition? Broker should give you a good answer so you will
like the person and to know the person you are working with.
-What is the best interest rate
they can give you, what type of loan program they have, and what
they think the best loan program is for you.
When you start the process with
mortgage broker they will ask you to bring some documents, because
this will help them asses your personal information because each
person is different. Broker wants to see at least 2 years of tax
returns, recent pay stubs, recent bank statements and simply each
lender will have a list of documents that they want you to
bring.
Get those documents as quickly as
possible so brokers can truly do their job, which is to find the
best loan for you at the best rate because time is of the essence.
When you talk with a broker, when
you interviewing them, or you are having an init ial conversation
make sure you are satisfied, make sure you understand it. Ask stupid
questions, if needed, and remember there are no stupid questions. In
most cases this will be the biggest investment of your life. Ask
questions and understand those questions!
Once you have decided on a
broker, the first thing they will provide you with is
pre-qualification letter. Primarily what it says is that your debt
to income ratio has been analyzed and based on preliminary credit
information they feel comfortable that you are qualified for a
certain amount of dollars. This will give your realtor an idea
in what price range you can shop for a home.
You are being pre-approved with
this letter, and what it means is that you are ready to get a loan,
write a check to the for a down payment (if any), based on a
approval of a property (appraisal).
Major aspect of financing is to
determine an interest rate. Do you want fixed interest rate or
variable? Fixed is exactly what it says, fixed for a certain
time where an interest rate will not change during that time. For
example your payment is "$1250" your interest rate is "5.5%" and
nothing will change. Very save and secure loan no matter what
happens in the economy your payment will remain the same.
Variable has lot of pros and
cons. If you are planning to be on the property for a short time
(2-5 years), variable might be a good thing. For fixed rate, there
is usually little bit higher interest rate than variable. With
variable, lender will take the interest rate and based on one of the
four indexes (COFI, LIBOR. MTA, Prime Rates). Your interest rate
will adjust every 6 months, some 12 months, some after 1 year adjust
every month depending how index will perform. If index goes up than
your interest rate goes up, if it goes down than your interest rate
goes down.
Typically with variable loans you
have a low interest rate to start with which is much more desirable.
Some will get into interest only and some get into below interest
only which will lead to negative amortization. Interest Only means
that you are only paying interest on the loan regards where it goes
up or down, therefore, the principal always remains the same. If you
are banking on that you will be on the property for a few years and
than the property will go up in a value.
However, if you look at a
property as your dream house and you plan to raise your family there
you may look at fixed rate because you know that your payment will
always be the same instead of some funky loan that may fluctuate,
and is some cases payment may even double with variable interest
rate.
How many points is a lender going
to charge you? Most lenders charge between 1%-2%, if however,
a lender is charging you more it is because you might have a sub
prime loan (bad credit loan). Sub prime means that you have less
than desirable credit, or may not have cash for down payment.
Remember there are lots of loan
programs available, so get yourself educated, talk to brokers and
make sure you ask questions. Keep digging until you are 100%
satisfied.
GM and Chrysler are in hot water as these companies
cannot simply liquidate, according to President Obama. Letting
these companies collapse would leave to even greater recession
or even depression. But is President Obama actually right
about spending money on car companies?
Rates hit the lowest levels in decades as
30 year mortgage rate slid to 4.78 percent this week. Troubled
housing is moving closer to the bottom, according to Freddie
Mac.
Recent Fed announcements are showing
signs of lowered mortgage rates. With mortgage rates near 50
year lows Fed again surprised many investors as it plans to
buy up to $300 billion of long-term government bonds and $750
billion in additional mortgage backed securities. But what
does it all mean for you?
Freddie Mac reported drop in 20 year
fixed mortgage for the 10th consecutive week to a new low of
5.01%. This is the lowest rate reported since Freddie Mac
started to report average rates in 1971.
Homeowners everywhere are
taking advantage of low rates as Fed cut rates. Mortgage
brokers reported a surge in refinance applications as rates
have come down to 5.06% for 30 year fixed.
Dramatic drop in mortgage rates has
stirred interest in refinancing. According to Freddie Mac 30
year mortgages rates fell to an average 5.47 percent in the
last week, as it was the lowest since March
2004.
Lobbyist are pressuring the Treasury
Department to prepare a plan to purchase current portfolios of
mortgages from banks in hopes of lowering mortgages to as low
as 4.5%
With struggling economy, government's
latest effort to unfreeze credit market may help economy to
stabilize. With two new programs announced Tuesday government
will provide financing to unfreeze debt from home mortgages to
credit cards.
The
government is working hard on Sunday to rescue Citigroup
before Wall Street opens on Monday as worries about its
financial health had hammered its stocks.
The U.S Economy will most likely stretch
into late 2009 as Fed official warned on Friday. As consumers
cut spending, economy has been going through a roller coaster
for the past few months where many analysts believe the
economy will continue to shrink through the rest of this year
and into the next.
Another disappointing day on Wall Street
led investors to 200 point loss. With no signs of recovery
stocks are expected to continue its decline for a few
weeks.
Treasury will not longer purchase bad
mortgages from banks after all. Treasury Secretary Henry
Paulson backed away from the long time awaited plan and
suggested that Treasury will inject more capital into
financial institutions.
Another wave of help is coming form the
government and mortgage lenders to help hundreds of homeowners
re-negotiate mortgage loans that are held by Fannie Mae and
Freddie Mac.
Credit crises is plummeting real estate
values all across U.S. and it is not allowing home prices to
move up any time soon. So when is it a good time to sell a
home or buy a home?
Just after elections Down Jones had two
biggest day decline of almost 10 percent on worries about
economy which seems to spread to almost every
sector.
The
federal government's Hope For Homeowner plan started Oct.1 and
a "proactive home retention plan" for Countrywide customers
will begin in December. This program is slowly making its way
to help homeowners as government is providing $40 billion to
help homeowners to avoid foreclosure.
Banks are tightening even more on their
lending practices from home mortgages to credit cards and
business loans. The Federal Reserve said in its quarterly
survey of bank lending practices that most banks are
tightening their credit guidelines even
further.
Remember when you received tax rebates of
$600-$1200 this year? Now be prepared for a second round.
Lawmakers are in talks next week to release details of new
stimulus packages to help economy.
White house served notice to banks who
received bailout packages to start lending money. It was known
that banks did not use the bailout money to lend.
$125 Billion financial plan to purchase
none banks stocks was signed Sunday and will be deployed this
week. The deal is designed to help banks to start
lending again.
Have you heard about the possible
bailouts that government is doing to help financial banks and
markets to recover? I bet you did, but how can you get that
loan you need.
As
economic problems persist in market despite government efforts
to ease crises with bailout packages another step would be
necessary. Fed. might have to cut rates by 0.5 to 1 basis
points to ease Wall Street desperate moves of selling
stocks.
A huge sell off on Friday led global
markets send indexes to their lowest levels in more than fie
years with believe that economy is near
recession. Trading was dramatic as Dow Jones industrial
fell more 500 point in early trading, before ending the day
with 300 point loss.
A wild ride on Wall Street pushed stocks
lower during morning trading and finished trading with 100
point gain. Fears about economy were clearly seen as investors
were in despair stage today.
There is no end to financial crises and
many older Americans see no signs of retiring as their
portfolios shrink and home values declined. Many Americans
said that they plan to work past retirement.
Wall Street showed another hard day of
losses as investors quickly start selling when quarterly
earnings were reported. Major indexes fell more than 4% with
Dow Jones tumbling down 515 points.
First time homebuyer's data fell 16.6
percent including consumer who wants to refinance. The
Mortgage Bankers Association's seasonally adjusted index of
mortgage applications fell to lowest levels since
2000.
The U.S. Federal Reserve launched a new
measure to help financial markets. To restore liquidity in
money market mutual funds Fed is taping a new bill of $540
billion.
A
new idea by Ben Bernanke and President Bush to help sluggish
economy with new stimulus packaged helped Wall Street regain
some gains. However, so far we will have to see what kind of
package Congress will create.
Wall Street moved higher during early
morning trades while Ben Bernanke urged congress to consider a
new plan and the White House said that President Bush was
"open" to the idea.
Wall Street remained tense as fears of
global recessions are on the loom. Even Fed policymakers are
saying the economy appears to be in a recession. Investors
examined data and looked for clues on economy as Dow Jones was
down 380 at one point, rose more than 400 points in the final
hour of trading.
The
economy has sunk deeper into more economic problems from
credit and financial crises as the Down Jones industrial
dropped as much as 733 points on worries over retail sales.
The government's report that retail sales plunged in September
by 1.2 percent, almost double the 0.7 percent drop analysts
expected. Consumers are reluctant to spend money currently due
to bad market and economy.
First package to unclog financial markets
was announced by President Bush on Tuesday saying the drastic
steps were "not intended to take over the free market but to
preserve it." Nice
major banks will participate initially in this plan. Federal
Reserve Chairman Ben Bernanke said a U.S. financial rescue
plan would restore normality to markets. Although the
government had acted quickly, most banks were still solvent
and able to lend, Bernanke wrote.
Wall Street came back after its worst
week and staged a surprising one day jump gaining 900 points.
So far it is not over, but buyers have returned back to market
buying low priced stocks and helping Dow Jones gain its market
share again.
Today the most serious crises are
affecting almost everyone. Some lost lots of money, savings,
401K and other investments. Seems like in January we noticed
something was wrong. But no-one expected closures of banks,
Dow Jones jaw opening loses and other negative economic
turmoil which is still not over.
The
NASDAQ finished with a modest gain, while the Dow Jones
industrials lost 128 points. The Dow fell 600 points in the
first 15 minutes of trading, than it recovered and finished in
negative 100 territory. Over the past week market has posted
huge looses, but today there was an unusual high volume of
stocks traded. Close to 2 billion of shares were traded in
what seems like a turning point in our economy.
No
matter where you look today, money are problem. Investors do
not want to invest due to risk of volatility and sellers are
everywhere. Fear is still spreading on Wall Street and seems
like it is not going away any time soon.
Federal Reserve and The Treasury
Department took major steps to support commercial paper
markets. Many investors stayed away from purchasing commercial
paper, which was a cause of economic slowdown, but central
bank was creating a special facility to help the $1.7 trillion
commercial paper market. This includes also credit cards and
auto loans to move economy forward.
Some people cheered today, some didn't.
Many taxpayers saw today's decision as no more debt added to
our economy. Yeah, hard time will come in the future, but who
knows economy will bounce back somehow. That was what is
written all over the web on many blogs and
articles.
The
financial crisis continues to unravel in the United States.
Every financial commentator is talking up the U.S.
government's list of more than 100 "problem
banks."
Being an election year, a new president,
depending on the policies of his platform, may be able to
change the economy to such an extent that the real estate
market also changes.
Fannie Mae and Freddie Mac own or
guarantee nearly half the $12 trillion U.S. mortgage market.
Not long ago, they were the darlings of Wall Street, ranking
next to U.S. bonds as among the safest and most conservative
investments in the world.
So
the inevitable has finally happened. A few months back the
government authorized themselves the power to take over Fannie
Mae and Freddie Mac "should the need arise". Yesterday the
government finally pulled the trigger on their carefully
planned take over of the mortgage giants that are responsible
for about $6 trillion dollars in mortgage debt between the two
of them.
Dealers typically sell your contract to
an assignee, such as a bank, loan company or credit union.
Compare current rates being offered by contacting various
banks, credit unions or other lenders.
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Opportunity (c) Copyright 2008 RateTake.com