November 29, 2010
November 29, 2010 by admin
The stock market continues falling from concerns over European debt concerns. Despite news that Ireland would receive upwards of 200 billion dollars in financial aid, stocks dipped sharply before a rally at the end of trading on Monday allowing the market to finish north of 11,000. The market continues to face international pressure from the credit markets and debt financing fears.
The DOW has been well above the 11,000 point level for the last thirty days and heading into prime holiday season there are numerous factors that are aiding to optimism for a stronger recovery into 2011. Early indications that consumer spending is picking up could be a boost to the economy and confidence. Building up confidence in corporate America will be crucial if there is going to be job creation and wage growth in the near future.
The real estate market is one of the major areas of concern hanging over the economy. Home sale reports for October have been disappointing as new and existing sales are dropping sharply. The lingering fallout from the foreclosure problems, combined with consumers believing prices are likely to fall further is leaving a number of buyers on the sidelines. Fixed mortgage rates have risen a little over .25 points in the past two weeks. Most national mortgage lenders were offering thirty year fixed rate loans at 4.3% and fifteen year loan terms are just north of four percent. The upward tick with interest rates is likely to stay around through the balance of 2010 as there is little reason to believe that interest rates will fall back to the historical sub four percent levels they reached earlier this year.
Creative home financing options for today home buyer
November 23, 2010 by admin
Creative Home Financing, when obtaining a traditional mortgage may not be an option
Owning a home is a fulfilling investment. Many people still dream of having their own house instead of renting one but find it difficult to fulfill their goal due to financial constraints considering the economic condition of the country. Although the economy is already gradually improving, many Americans are still affected with the economic slump. So, when it comes to buying a home, not every American citizen is able to enjoy the chance of getting low mortgage rates.
However, there are several options to financing a home. In the real estate industry, there is what they call creative home financing, which provides a list of possible and practical options for a homebuyer to purchase a home. What are these options?
Shared Ownership
If the residential property is a little too expensive for one’s budget, a shared ownership option is possible. For this option alone, a homebuyer can have various means to buy a home with shared ownership. One option is to purchase a home with a friend or someone who also plans to buy one. Purchasing the property together means sharing the fees such as the initial deposit, closing costs, house repair, and maintenance, among others. Another option, which is common to tenants is to purchase apartments or several units together with other homebuyers.
Homebuyers can also opt for the so-called cohousing. Several homebuyers purchase a piece of land, own a residential property in clusters or in groups, and they share the applied fees and charges as well as the ownership rights.
State Government Housing Programs
If money is a big issue, the state government always provides financial programs to interested homebuyers who can barely afford to own a home. This financial assistance is usually given through a loan-guarantee program with the lowest possible interest rates. For those who can barely even pay the regular monthly amortization, there is also an outright loan program specifically offered to low-income homebuyers.
Another option that the government provides is to allow the homebuyer to borrow money from their 401K or to take the money out from their IRA. As for the IRA option, the 10% withdrawal fee will not be charged to the borrower for home loan purposes, but the income taxes will need to be paid.
Residents in the rural areas or those living in the outskirts of the suburban communities can take advantage of loan subsidies in very low mortgage and interest rates.
Aid from Friends and Relatives
The family and relatives or even friends are always there in times of need such as buying a home. There may be good friends who can lend money with or without interest, based on mutual agreement. In certain cases, moving back with the parents temporarily may be a good option while allowing enough time to save up money to finance a home in the future.
Holiday season means a rush for short term borrowing and payday loans
November 21, 2010 by admin
What is a Payday Loan?
The holidays are always a period of increased financial strain as the challenges of buying gifts and holiday expenses can take its toll on your personal budget. It’s no wonder that this time of year sees a splurge with applications for signature loans and payday advances as consumers feel the pressure to purchase gifts and spend money that they dont have saved to participate in the joyous seaon. If you are considering taking a short term loan this year, there are some things you should probably be aware of regarding the pros and cons of short term cash advance loans.
In today’s times, you cannot plan for most things and financial emergencies can crop up any time. For instance, you may have to travel to another state or country in a jiffy, or you may have an urgent medical problem that needs to be treated. You may have to fund for your child’s education, you may simply have this need to buy a home appliance or you may need money to pay back an outstanding bill. For any kind of financial emergency, there is help in the form of payday loans.
To qualify for a payday loans, you need to have four main criteria:
1. Be above 18 years of age.
2. Be a resident of the country in which the payday loan is applicable
3. Prove that you have full time employment with salary being deposited into the bank account
4. Be able to furnish post dated checks as an alternative.
Various states in the US have restrictions or caps on the maximum payday loan money that is lent but in certain states like Wyoming, there are no such limits. The first payday loan that is lent is of a modest figure, $ 100 to$450. But with a good history of payment settlements and dealing with one company over a period of time, may make them give you significant advantages including extension of the amount lent.
Payday loans being a highly unsecured form of debt, which is not even related to the credit standing of person, have high fees and high interest rates attached to them. Since your credit is not affected by borrowing these short-term loans, the only thought you should give to, is clearing the money by the next pay check. Most people who go for payday loans are people in working class or lower middle class bracket, typically those with bad credit. Such people who are not entertained for credit in most conventional circles find a good opportunity to get cash instantly through this cash advance opportunity
You may think that it is better to ask for loan from a friend or someone you know, rather than risk the high interest rate of a payday loan. Well, if someone is going to lend the money for you, without any interest rate, you can consider yourself lucky. But since recession has struck everyone, most people in the working class category may not have extra money on the side because they too are moving from paycheck to paycheck. Also they may be able to help you financially for once or twice but asking again and again will subject you to embarrassment. That is why if you are confident that you will be able to pay through your next check, it makes more sense to apply for a payday loan.
Payday lenders are available 24/7 and you can reach out to them for a loan through the Internet, the phone and the fax; besides meeting them in person. Since the amount accessible to borrow is maximum up to $1,500(in some cases, up to 2,500), it is not tough to pay back the loan. You are supposed to pay back the money within a certain schedule which may be anywhere between 15 and 30 days. You can also prefer to choose the ‘auto debit’ option where the money will be withdrawn from your account in favor of the lender as a payback. You can also choose to rollover or move the repayment of a part of the loan to the next month or so, but then you may have to pay higher interest for the roll over. So, it is advisable that you apply for payday loan only for an emergency rather than mere splurging.
November 16, 2010
November 16, 2010 by admin
Summer déjà vu all over again as the stock market dropped like a lead balloon today, following new reports out of Europe that there are concerns over debt levels. Today, the DOW dropped nearly two hundred points following news that Ireland was having challenges meeting its debt levels and the EU would be forced to create a financial rescue package for the struggling country. The news sent shockwaves across the global markets and major markets dropped from Asia to Europe as a result.
Mortgage rates have been moving up this month, despite a pre-emptive move by the FOMC to continue purchasing treasury bonds. Yields on the ten year treasury have jumped nearly twenty basis points over the last two weeks, driving thirty year mortgage rates well above four percent (4.38% reported by most national mortgage lenders). Today’s major selloff in equities may not have a lasting impact to bring rates down from their rally and moving back below four percent seems to be less likely at this point.
The real estate market received another dose of good news with the release of a report from an independent study that has proclaimed the FHA program through HUD to be in better financial shape that anticipated. The audit found that the record volume year that FHA had in 2009 helped to significantly boost the agencies insurance capital fund to sufficient levels, even as the housing market has struggled into 2010. FHA loans have grown from under ten percent of the market to nearly forty percent of the market today. Guidelines for FHA loans have gotten tougher, but they remain the most viable option for first time buyers with minimal down payments. This year FHA put the following changes through:
Require borrowers have at least a 580 FICO score in order to purchase a home with the minimum 3.5 percent down payment.
FHA now requires that borrowers with scores between 500-579 make down payments of at least 10 percent, and those with scores below 500 don’t qualify for the program at all.
The real estate market is optimistic that the recent moves by the FED will help keep loan rates lower for the next year and help bring more borrowers into the market. News that a settlement may be nearing to the foreclosuregate scandal could also be good news for the market as bank foreclosures need a way to work their way back into the inventory in a manner that brings confidence to potential buyers, but offers fairness to the homeowner who defaulted.
Finding the hidden benefits to FHA mortgage loans
November 14, 2010 by admin
Benefits – Conventional Loan vs an FHA Loan
* Competitive mortgage rates – Since the FHA loans are approved for people with lower credit, the risk associated is greater with such loans which translates to slightly higher rates. The conventional loans offer lower rates as they approve borrowers who have good credit.
* No closing MIP – All FHA loans include mortgage insurance premiums or MIP. The insurance premium is collected as one-time upfront mortgage when you close the loan, the amount dues is calculated at a rate of 2.25% of the total amount due. Such an up front premium is not required in conventional loans.
* Flexible terms – Several repayment periods are offered by conventional loans which mean the mortgage rates are competitive. The rule of thumb is, the lower your term, the lower the rate charged. The repayment period can range between 10-, 15-, 20-, 25- or 30-years. Such options are not available in FHA loans.
If you don’t have the standard down payment of 5-20% and if your credit is not good enough then the FHA loan is the right option for you. In contrast, if your credit is good, you have a stable job and can afford a down payment; conventional loans will allow you to save money over the term of the loan.
You must understand the benefits and features of the FHA loans to find the option that is right for you before applying. The FHA loan has a fundamental difference with other sub prime loans; the interest table is structured without any changes through the entire term of the loan and cannot be disturbed for the complete loan life. This avoids having to pay higher monthly payments 5 or 6 years into the loan term and turning into a defaulter if you are unable to repay the higher amount. The situation could aggravate and lead to a foreclosure of property or bankruptcy.
The fixed interest rates offered by the FHA loans are much lower when compared to the borrowing rates from other non conforming loan options that were offered many years ago. Homeowners will find this a beneficial loan arrangement. Credit rating scores as low as 580 can also be considered for FHA loans, this ensures that the advantage is available for every home buyer. Other conventional loans require a minimum credit score of 740 to be eligible for the loan. Those who have a bankruptcy record can apply for FHA loans after a gap of two years from the date of the incident. For a foreclosure history the period is three years. The financial troubles faced by the applicant will be ignored if the person has a steady job and preferable with the same employer with a stable monthly income and periodical hikes.
The minimum down payment is another benefit of the FHA loans; the amount required is only 3.5% which is easy for the borrower to pay. The monthly installment for repaying the loan does not cross 31% of the applicant’s gross monthly income. The FHA loan requires you to take a mortgage insurance which qualifies you for a refinance of the existing mortgage whenever required. The refinancing procedure is easy and can be done quickly.
The fixed interest rates make the FHA loans a more attractive option when compared to other traditional loans. The loan amount you can get depends on the area you live in and the standard of the housing business there. You can easily find a house in the area you want and get an FHA loan without any hassles. The Department of Housing and Urban Development has put an upper loan limit to the loans available for citizens; it has also stipulated certain rules that need to be fulfilled to qualify for the FHA loan. Get assistance from financial counselors approved by the federal government when deciding on the loan you want. They can provide helpful advice free of charge.
November 10, 2010
November 10, 2010 by admin
The stock market has not been able to rally this week, following a better than expected employment report for the month of November. The market appears to be growing more cautious as concerns over the dollar and the Federal Reserves involvement with keeping the market and economy afloat for the near term. Most corporations have reported earnings for the third quarter of 2010 and their is optimism in the economy heading into 2011. The fourth quarter will be heavily centered on holiday shopping and retail sales to gauge the confidence of consumers in the marketplace. Depite a small increase in the DOW trading today, fixed mortgage rates are likely heading lower as witnessed by a drop of eight basis points in the ten year treasury which dropped from the 2.7 level to 2.62% on Wednesday. Fixed mortgage rates for thirty year loan terms were being offered just above four percent by most national mortgage lenders, demonstrating that the Fed’s desire to keep mortgage rates and interest rates at healthy levels has been working as they work to stimulate growht and borrowing on multiple fronts. Their is little reason to anticipate a large increase with fixed mortgage rates in the near future and homebuyers who are in the market to purchase should continue to see rates under five percent for the early part of 2011.
Regulations covering the payday and cash advance loan industry
November 9, 2010 by admin
Payday Loan Industry Regularization
Payday loans, arguably, the ideal short-term loans solution for many to avail of, to tide over their financial hurdle; is one of the hottest points of debate in the country today. The payday loan industry has been growing phenomenally and a large number of people, who have been struck by recession, are depending on payday loans as a solution for their personal and business debt. The fact that these loans are easily accessible and can be availed of in 24-48 hours is an attractive proposition to many, notwithstanding the high interest rates that is charged on these loans.
The reason for payday loan industry to grow so significantly is because of the money earned in the form of high interest rates and fees. The fees charged as $17.50 for every $100 lent; the lenders are known to reset the fees every time the borrower does not pay the amount in pull. The cycle goes on and soon the borrower is in a debt trap situation. Due to the unsecured nature (no collateral) in the payday loan transaction, the interest rate charged can be staggeringly high. The interest rates (APR)Â for a one-week loan, two week and a month-old loan can be 911%, 456% and 212% respectively.
In the US, payday loans are legal in 37 states; while there are 13 states in the country where payday lending is considered illegal. These states include Arkansas, Georgia, Connecticut, Maryland, Maine, Massachusetts, New Jersey, New Hampshire, New York, New Jersey, North Carolina, Ohio, Pennsylvania and West Virginia. While in places like California, the maximum amount that can be lent is $300, in Idaho, the money that is lent can be as high as $1000. There is no specified amount or ceiling on the money in states like Wyoming and Wisconsin.
The payday loan industry has come in for more than a fair share of criticism from lobbyists who are clearly against the high interest charged by these companies. Payday loan companies defend the high interest charges saying that these are unsecured debts and the processing costs are no different from other loans like home mortgages. They say that quoting modest interest rates for lower amounts and short-terms loans is not profitable. But critics argue that payday lending processing costs are not high as mortgages because while they perform full credit checks, payday lenders merely look at recent pay stubs. Payday lenders have manage to circumvent the usury laws, which do not allow interest rates to be more than a particular percentage; by collaborating with nationally chartered banks located in a different states like South Dakota or Delaware. The loan is then regulated by that state law, regardless of the borrower’s residential state.
Four years ago, the United States Congress had passed a law that the payday lending cap for military personnel should be maximum of 36 percent APR . Federal banking regulators and legislators are of the opinion that the payday loan industry should scrape off the high costs of payday loans not just for military personnel but for everyone, especially the lower middle people who constitute the primary borrowers.
November 3, 2010
November 3, 2010 by admin
The FOMC decision to purchase almost six hundred billion dollars of mortgage backed loan securities over the six months as a last ditch effort is being viewed with mixed reviews from most economists and market experts. The FOMC is trying to keep bond rates low by further subsidizing the bond market, hoping the lower rates will spur lending to small businesses and consumers who will in turn begin to spend money and boost the economy. The major downside is that this puts the FOMC in a very challenging position of owning a large amount of treasury debts.
The stock market did not view today’s announcement with great enthusiasm and the DOW managed a mere twenty point rally on the news. The bigger news was that the yield on the ten year treasury actually rose on the news up into the 2.6% range. The upward movement in bond yields is pushing fixed mortgage rates for November to move higher and most national mortgage lenders are now offering thirty year loan terms just above four percent. Creative marketing will likely entice consumers with sub four percent interest rates, but be prepared to pay discount points to secure these loan rates.
Understanding the impact of foreclosuregate on the mortgage industry
November 3, 2010 by admin
Industry-Wide Impact of the Foreclosure Crisis in the US
The issue of foreclosure crisis in the US is becoming tighter and more heated these days. Aside from the homeowners who are primarily the most affected in the current mortgage condition, the banks and lending institutions are also facing complications. In particular, many of these lending companies are duly investigated for claims of falsified mortgage documents and other erroneous claims. So they are facing homeowner lawsuits at the height of a heated foreclosure crisis in the country.
The Plight of Lending Firms on Lawsuits
These two major lending services, among many others, are facing lawsuit charges and investigations from the state attorney general mainly for erroneous processes in handling homeowners’ mortgage documents whereby certain home ownership titles are not clearly established as well as issues arising in foreclosure practices. This has reached the attention of the Congress and so current investigations are done in order to determine flaws and mistakes in the mortgage process. Both lending firms have delayed foreclosures to many homeowners in 23 states where the state government has jurisdiction over home foreclosures for a scrutiny of suspected mortgage documents with falsifications. Bank of America is also facing the same issue. The company was asked to temporarily stop home seizures due to the ongoing investigation. GMAC was known to have recklessly processed mortgage applications without clearly verifying the accuracy of the documents.
As with the issue of foreclosure practices, the lenders use these erroneous documents to seize homes especially when the banks have no control over the properties. In Ohio, for example, Ally Financial has been sued for inappropriate foreclosures.
Civil Lawsuits due to Incorrect Sales Practices
The loan and lending companies are facing charges due to unlawful sales practices and violations of consumer protection laws. These faulty sales practices can adversely affect homeowners by having no absolute right to fight for their homes, even with the falsified documents. The mortgage banking industry developed the Mortgage Electronic Registration Systems (MERS) as a tool for dealing with mortgage transfers among member banks. But this, too, was investigated and is now facing a civil lawsuit for anomalies used in mortgage foreclosures.
Impact of Falsified Mortgage Paperwork to Homeowners
Home buyers who purchased repossessed homes with no established titles to prove ownership of the property are now facing worries and troubles brought about by the foreclosure crisis in the US. Many of these homeowners are dwelling in properties that they have been paying but not legally their own because of unattended mishaps in the processing of mortgage paperwork by the lending firms from the original homebuyers. Technically, this is termed as defective title in the mortgage industry. Some homeowners who become victims of this situation fought for their right by bringing the case up to court and would eventually win the case over faulty documentation and have the foreclosure reversed. Yet, there are families that are forcibly thrown out of their homes by the lending firms without a good understanding of the complications they are experiencing because of those repossessed properties.
Robo-Signer Problems in the Foreclosure Crisis
November 1, 2010 by admin
Amidst the foreclosure crisis in the US today, not all American citizens are knowledgeable about how the mortgage industry runs. More specifically, not everyone knows the bits and pieces of mortgage terminologies. One such mortgage industry jargon is the robo-signer which may seem to be a strange word to some. How the robo-signer plays a role in the current foreclosure crisis will be elaborated in this article. Recently, there are 23 states with pending and suspended foreclosures as these are under investigation mainly because of procedural mistakes in processing mortgage documents and the robo-signers have something to do with such issue.
What Robo-Signers Do
The robo-signers are the ultimate assistants of the primary mortgage companies and lending firms to handle thousands of default loan backlogs and process foreclosures. It basically processes and signs the reviews for every paper work of homeowners whose properties are about to be foreclosed. In the mortgage industry, the usual procedure before any foreclosure is a thorough review of the mortgage documents to determine whether the bank can take over the property or not. Since many mortgage companies process faulty documentation, these pending foreclosures will not go through if the review proves these falsifications and if it is not duly notarized. So, the robo-signers work to sign off foreclosure documents in bulk weekly or monthly.
Minimum Knowledge about the Mortgage Industry
Little do the people know that these robo-signers hired by the lending firms and mortgage companies are not fully knowledgeable about the mortgage industry and the processes in different aspects such as foreclosures. They simply sign foreclosure affidavits without carefully reviewing the papers, some barely laying eyes on those documents. So, they produce signed off documents in large numbers, with each document signed in a matter of seconds. As far as understanding the terminologies, processes, and procedures in a mortgage, these robo-signers barely have any idea. One example was an investigation conducted to one of the robo-signers in Litton Loan Servicing who was asked the definition of basic mortgage terms such as lien, receiver, and promissory note but was not able to produce an answer.
Robo-Signers Problems from Various Mortgage Firms
Many homeowners are unaware that robo-signers have contributed to the complications that lending companies are facing in the current foreclosure crisis in the US. GMAC, partly owned by the government treasury and a subsidiary of Ally Financial, admitted that its robo-signers processed more than 10,000 foreclosures monthly or roughly about 120,000 or so in a year. The firm is presently putting foreclosures on hold where current investigations are done to identify procedural mistakes in mortgage documentations. Another major banking institution to engage in robo-signing is JP Morgan Chase, which was reported to have produced about 18,000 foreclosures in just one month. Testimonies from former JP Morgan employees noted that the robo-signers normally sign off 750 foreclosures in a week. These firms and many others such as the Bank of America and Litton Loan Servicing have halted foreclosures in many states due to irregularities in robo-signing.