Archive for April, 2008
Mortgage Bankers Association Predictions
The origination of new mortgages is expected to continue to drop through 2007, according to a report issued at the Mortgage Bankers Association (MBA) at the end of October 2006. The report stated that when 2006 is done, mortgage sales will have slipped nineteen percent over the year previous. Nevertheless, 2006 will maintain a position as the fifth highest year on record for new mortgages. The report recognized the last five years of home sales as being an unsustainable pace and characterized current circumstances as the beginning of a normalization period. In raw numbers, mortgage origination was at the $ three trillion mark or above in each of the last three years (2003 - 2005) and hit its peak at $3.9 trillion in 2003. From that perspective, it appears that mortgage sales began to taper a couple of years ago. The production of U.S. home loans will slide 19 percent this year to $2.46 trillion, and then drop another 14 percent in 2007 before stabilizing the next year.
The MBA sees 2007 mortgage creations totaling $2.12 trillion in 2007 and holding at that level in 2008. That’s an interesting, long-view analysis from a source of expertise that is more likely to deliver a disinterested viewpoint than the market analysts that read thuds and crashes into every change in the prime rate. It shows a mortgage market that is, the sale of new loans that will have decreased by 46 percent over a four year period from January 2003 through December 2007. Further, the report suggests that the decreased level of mortgage sales will remain in place for the ensuing year, implying that the lower figure is closer to a “normalized” mortgage market. In the meantime, mortgage rates are continuing to drop, down again at the end of October to 6.36% on a thirty year fixed loan.
So the interest rates continue to invite refinancing, and the number of ARMs scheduled to adjust in the next two years would seem to invite substantial refinancing. Nevertheless, the MBA’s expectations are for a protracted downturn. The MBA estimates that between $1.1 trillion and $1.5 trillion of ARMs will be up for adjustment in 2007, compared to the $400 billion that reset this year.
Their prediction is that $600 billion to $700 billion of those loans will likely refinance, while $500 billion to $800 billion will reset. While these estimates have extremely wide parameters, it is worth noting that the MBA sees something like half of all ARMs moving into maturity and being retained by the homeowners that hold them. That is in contradiction to the predictions that the widespread distribution of interest only and option ARMs will lead to disruption of the mortgage market. It is also encouraging, in the face of warnings issued about these loans by mortgage reinsurers and new guidelines about their use issued by the FDIC. It”s probably worth considering the source on this issue, particularly with regard to the successful retention of reset ARMs and substantially higher mortgage payments by tens of millions of homeowners. The MBA does acknowledge that delinquencies and foreclosures will be on the rise, although they are not forecasting any rate of increase in their report. They do note that how the ARMs play out could have a significant impact on the mortgage market, and predict that ARMs will drop to 19 percent of all mortgages issued in 2008, as compared to 30 percent at the beginning of 2006.
By Bobby Heavens
Getting a mortgage with friends
Property prices for even the smallest apartments are beyond the reach of many first time buyers nowadays. As a result, more and more people are clubbing together with friends to share a mortgage and ownership of a property. It’s a very good way to get on the property ladder, but as such arrangements are never normally for life and one or more party will inevitably want to sell eventually, the fine details should be agreed clearly at the outset to avoid financial loss or the loss of friendships.
The terms of a joint ownership mortgage are no different from a standard mortgage. Regardless of the amount of deposit that each person pays or the salary that they are earning, each shares equal liability for making the mortgage repayments as far as the mortgage lender is concerned. So if one person stops making repayments, the others will have to cover their share to ensure that the full repayment amounts are paid. It’s up to the joint owners to decide how they will divide the mortgage repayments and ownership of the property between themselves.
Clearly, a legal agreement is the best way to ensure that everyone understands their rights and responsibilities. This isn’t a sign of mistrust, it’s simply a guarantee of protection for everyone. Although not compulsory when taking out a joint mortgage with friends, it’s certainly wise to do so. It won’t cost much to have one drafted up by a solicitor. In fact so many people are taking out mortgages in this way that some mortgage lenders provide specially tailored joint ownership mortgages that include the drafting of a legal agreement.
Although the mortgage calculation is based on the sum of everyone’s incomes combined, the mortgage lender doesn’t give people different sizes of share in the mortgage or property. How much each person contributes towards the repayments is up to the joint owners to decide. It doesn’t have to be directly related to each person’s salary. This should be set out in the written agreement.
It can become more complicated in circumstances where individuals have put down different deposit amounts. However, again it’s up to the joint owners to decide how they want to divide the shares in ownership and in the mortgage.
If there’s only a small difference in the amount of deposits paid by everyone, it can be evened out informally by those who paid a smaller deposit making separate repayments to those who paid a larger deposit until their contributions are balanced out.
Alternatively, you may decide that each person has their deposit amount returned to them upon the sale of the property before the remaining profit is shared equally among the joint owners. This tends to work best in circumstances where the deposit amounts are low.
A common agreement for joint owners who have paid different deposit amounts, particularly if they are a large sum, is for the share in the ownership of the property to be equal but for each person’s deposit amount to be taken into account when calculating the mortgage repayments, so that those who put down smaller deposits have a bigger share of the mortgage. When it comes to one owner leaving or the property being sold, each person’s share in the profit is determined by calculating their share of the current balance of the mortgage deducted from the current market value of their share. This is fairer than taking an equal share of the gain plus giving each person back their deposit amount, as those who have been paying more towards the mortgage as a result of their lower deposits will actually have been paying more towards the capital than those who paid lower monthly amounts because of their higher deposit.
There are several different ways in which a person’s circumstances may change, thereby affecting their share of the mortgage and property. The details of what will happen in such situations should be ironed out in the legal agreement.
If for any reason one of the joint owners wants to leave, there are various possible options:
The person keeps their share of the mortgage and property and rents out their room.
The person sells their share to the remaining owners who can then rent out the room if they wish.
The share is sold to a third party in direct replacement of the person leaving.
The whole property is sold and all parties leave Insurance should be taken out as part of the legal agreement to cover situations in which people are unable to continue paying their share of the mortgage for a period of time, for example because of illness, injury, redundancy or death. For illness or injury, insurance cover will normally make their repayments for them for up to a year, and if the person is still unable to make repayments after this, their share of the property will almost certainly have to be sold.
If one of the joint owners dies, life insurance will provide a lump sum to pay off the person’s share of the mortgage, and, depending on the legal agreement drawn up, their share of the property will become part of their estate. Writing a will is a sensible precaution for ensuring that the deceased’s estate is distributed according to their wishes.
There are other things you’ll need to agree such as whether third parties can live at the property, and if so, for how long. You’ll also need to decide how you’ll split the fees for buying and selling the property.
All of these issues should ideally be specified in the agreement, which is best drafted by a solicitor to ensure that it’s fair and legally binding and covers all eventualities. Joint ownership with friends should be an enjoyable experience and you wouldn’t want to lose out on friendships or money as a result of misunderstandings.
By Brad Jensen
Home Loan Interest Rates vs. Mortgage Interest Rates
If you are interested in buying a home, you do have options. Many people opt to get a mortgage, but did you know, your bank may also offer home loans? Take into consideration the debate between home loan interest rates vs. mortgage interest rates before you even think about making a down payment on your future home. If you were to go into your bank to inquire about purchasing a home, you would be greeted by a bank loan officer. A bank loan officer works for the bank and tries to sell their employer’s loans and mortgages.
With a good credit report, it should be relatively easy for you to get a home loan straight from your bank. This works much the same way as it would if you were to obtain a personal loan or auto loan. The only difference is the amount lent is much higher. Continuing the debate between home loan interest rates vs. mortgage interest rates, mortgage brokers do not have a specific employer. These brokers work freelance to try to find you the best loan or mortgage possible from a wide array of lenders. This works well for people with unique credit situations. The broker will work to pair you with the perfect lender for your specific situation. There are several pros and cons for each bank loan officers and mortgage brokers. Bank loan officers will live in your neighborhood, understand the area and any specific needs you may have due to your locale. For instance, they would understand that you would need a specific type of heating system if you live in one area versus another. A mortgage broker can really help people with bad credit. While a bank may deny your loan request, a mortgage broker can find that one lender that’s willing to give you a chance.
However, the fact that the lender may live across the country can pose problems if you have area-specific needs. Ultimately, the home loan interest rates vs. mortgage interest rates debate will continue to rage on. It is up to you which option works best for your current situation and needs. A few things to take into consideration are your current income, how much you can afford to pay on a mortgage payment each month and whether or not you have good credit. Answering these questions should help you decide between a bank loan or a mortgage. Regardless, konut kredileri and banka kredi faizler are both excellent choices in taking the correct steps toward the home you’ve always wanted.
Mortgage Payment Protection Insurance-A Small Price to Pay for Complete Peace of Mind
Have you ever thought of how you would meet your mortgage repayments if you lost your job or if you are unable work due to an accident or a long illness? If you have not thought about this, it is time you did! Because you have an excellent cost effective option to protect your home in such circumstances- Mortgage Payment Protection Insurance. What is Mortgage Payment Protection Insurance? Mortgage is one of the biggest financial commitments in a person’s life. Mortgage Payment Protection Insurance is a sensible option for anyone who wants to protect their home from advent of unfortunate circumstances. When you choose Mortgage Payment Protection Insurance you can pay your monthly mortgage repayments even if you are off work due to illness or you are unemployed.
Mortgage Payment Protection Insurance from some companies also cover building insurance. These policies require a Qualifying Period of around 28 days, which is a minimum number of days before you can claim against the policy. Once you qualify the insurance company you have applied with will pay you until you get a job or reach the maximum number of months that the insurance company will pay out (which is generally for a year with exception of few companies which will pay for two years). You might feel that Mortgage Payment Protection Insurance with your mortgage lender is the logical step. However most mortgage lenders charge heavily. In such cases Mortgage Payment Protection Insurance from specialist providers is the cost effective option. The borrower needs to research and weigh the pros and cons of the policy before applying for it. Are you eligible for Mortgage Payment Protection Insurance? You are eligible for Mortgage Payment Protection Insurance if:
You are over 18 years of age and under 65 years of age.
You have already availed a mortgage or will be taking out a nationwide mortgage.
You are employed and have been employed for the last 6 months. However you need not be employed for 6 months if you are taking a new mortgage or a further advance.
You will be living in United Kingdom permanently.
However there are a few exclusions when Mortgage Payment Protection Insurance will not pay out. For instance when you voluntarily leave your job because of misconduct or dishonest behavior or if you suffer from long term financial problems which dont display any realistic chance of recovery. Most homeowners who have a full time working partner or savings to the tune of 8,000 will not be able to claim Mortgage Payment Protection Insurance. Life is full of uncertainties. It is difficult to imagine how you would cope with unemployment, accidents and many other unfortunate circumstances. But you can ensure that you sail through trying financial times with Mortgage Payment Protection Insurance
By John Hilgenberg
The Benefits of Using a Good Mortgage Consultant
Challenge your word vocabulary and boggle your mind. Understanding the financial world of home ownership is much easier with a good mortgage consultant, who can guide you through the lending options. Mortgage products are forever changing to provide more selection, more features and more confusion! Know the terminology and know what you are getting into, that’s the bottom line.
Residential mortgages comprise most of today’s mortgage business. There are many types of creative financing options for the homebuyer to consider. Additionally, there is a vast array of mortgage consultants with tremendous financing knowledge at their fingertips. Familiarizing yourself with phrases such as term of interest and life of your mortgage is highly important if you wish to have a life after signing the paperwork for your mortgage. The legwork to find the right home for your family is time consuming, fun and most often involves asking lots of questions to get exactly what you are looking for.
Likewise comparison-shopping when looking for a mortgage is essential. Attractive incentives are often offered, such as low interest rates, closing incentives, pre-approved packages, innovative refinancing options and leveraging untapped potential in your assets. Mortgage terms like fixed rate, adjustable rate, interest only, reverse, assumable and balloon payment mortgages are all specifically designed to meet the diverse needs of clients investing in home ownership.
Mortgage contingencies may appear fairly straightforward but can sometimes become quite stressful if the intent of the terms of the contingency are not clearly defined and understood. It is important to familiarize yourself with many new concepts, such as the 72 hour kick-out clause. Making sure you understand these concepts is the job of your mortgage consultant. Ensure your mortgage consultant takes the time to review all the fine print on your contract so that you are fully aware what is covered and for what length of time. A trustworthy working relationship is one where no hidden fees or requirements surface after the contract is signed. Home ownership is probably the biggest financial investment you will make in your lifetime. Take an interest in the interest. Be wise, thorough, get advice and don’t be shy about shopping around.
By john hemin
UK house prices fall again
Today, the Nationwide put out their latest house price index. Prices are now down 4 percent from their October 2007 peak. Furthermore, prices are also down year-on-year.