Thursday, October 18, 2007

Fed Prime Drops 0.50%

The Fed Prime Rate drops 0.50%. That's a significant low. Meanwhile, following the release of the September 18th minutes of the Fed's Open Market Committee (FOMC) meeting, financial markets reassessed the likelihood of another rate cut at the upcoming October 31st meeting. The market currently is looking for about a 30 percent chance of a 25 basis point rate cut rather than the 50 percent chance that they had previously expected.

A HomeBuyers Market?
Homebuyers paid 7% or 8% during the mid- to late-'90s, and double-digit rates were the norm throughout the '80s and early '90s. Compare that to todays rates and the talk about rates cuts and it's easy to see why it may still be a homebuyers market.

Can homeowners still save when refinancing? Refinancing savings all depends on when you bought your home and what rates were at the time. Currently homeowners can realize a savings if refinancing rates are 30 or more base points lower that ones current rates.

30 Yr Fix 6.37% 0.03%
15 Yr Fix 6.03% 0.05%
1 Yr ARM 5.58% -0.07%
5/1 ARM 6.11% -0.10%
30 Yr Tres 4.87% 0.10%
Fed Prime 7.75% -0.50%

To find out how much loan you can afford use the refinance calculator at

Monday, October 15, 2007

Foreclosure Prevention Help

The federal government and major industry players are taking a hard look at an what seems to be an impending foreclosure tsunami.

A recent announcement by the federal government and participating lenders regarding the formation of a group called "Hope Now" indicates relief may well be on the way. The group, consisting of banks and major lenders will help to improve assistance to troubled mortgagors.

The Mortgage Loan Search Financial Network reports growing use of resources designed to help home owners experiencing mortgage default. The sites located at features step-by-step guides to prevent foreclosure.

The Hope Now alliance is made up of all major mortgage servicers. These servicers handle 60 percent of the mortgages in the U.S. Federally approved credit counseling organizations are an important part of the network. The website is located at Users are helped to ID their servicers (i.e., look on your mortgage statement). Several approved credit counselors are provided along with links to foreclosure information.

Friday, October 12, 2007

Popular Financial Dictionaries Online

This blog will list useful dictionaries, Q&A's and Wiki reference guides as they become available.

Wiki A website or similar online resource which allows users to add and edit content collectively.

One of the more popular Wikis is Wikipedia. Wikipedia is a free encyclopedia than can be edited by anyone with access to it. It provides an easy method for linking from one page to another. This is a good place to find extended definitions to difficult financial terms.

Business Plan Glossary/Dictionary
I must include a dictionary I consider very useful for those putting together a business plan. The Business Plan Dictionary meets my criteria for usability. This dictionary allow you to lookup terms using a search box or scroll down. The terms and definitions are extended where possible to give the user a multi-faceted look at the word in order to better appreciate it. 

Loan Demand Rises - 5/1 ARM Dips

Demand for loan applications to purchase homes and refinance existing mortgages rose last week. In the week ending October 5, the seasonally adjusted index of home loan application activity increased 2.4% to 652.0, according to the Mortgage Bankers Association. Refinancing requests accounted for 46.2% of total applications last week, up slightly from 46.0% and adjustable-rate mortgages accounted for 13.6% of the total, down from 13.8%.

30 Yr Fix 6.37% 0.03%
15 Yr Fix 6.03% 0.05%
1 Yr ARM 5.58% -0.07%
5/1 ARM 6.11% -0.10%
30 Yr Tres 4.87% 0.10%
Fed Prime 7.75% -0.50%

Refinancing as a share of all mortgage activity increased to 46.2 percent from 46.0 percent the previous week while the ARM share continues to drop, representing only 13.6 of all applications compared to 13.8 percent one week earlier.

Wednesday, January 31, 2007

Cash Out Refinancing Rates - Good Time To Refinance?

At the present time mortgage rates are steadily going up. What does that spell for those seeking to lower mortgage payments, payoff credit card debt and opt for cash out. That all depends on three factors

1. The type of refinance loan program you choose.
2. Getting a good deal on rates
3. locking in rates on time

So yes it's all about rates and fees. Not so long ago I blogged about home mortgage refinancing vs. home equity loans and how to best deal with mounting debt issues.The issue had to do with the desparate measures people take to deal with defaulting on a car or home loan. Obviously getting financial counseling is one of them. Why? Although learning how to manage money is essential to maintaining or raising the quality of life many choose to get help when it's late in the game instead of getting this vital education and training before the game begins.

Now standing deep in debt homeowners decide to run for help. The fact is depending on the depth of debt, your options may prove much more limited than you realize. That said, when working income is just not there and credit card interest and penalty fees are mounting up more desparate measures are needed to deal with defaulting on a loan.

Home Equity Loan - A Solution?
Many homeowners opt early in the process to take out a home equity loan or home refinance loan. When rates began to decline in November and December there is no wonder why refinance applications went up. But now there is a slightly different reality, at least for the moment. Rates are climbing. What to do?

Cash Out Mortgage Refinance Options
There is always the trusty home equity loan program. But rates on these loans are higher than rates on a home refinance loan with the cash out option. That said refinancing may be your best bet. 

Monday, January 29, 2007

Cash Out Refinancing - A Solution To High Interest Rate Debt

I recently found out that the actual number of homes lost to foreclosure is unknown. The reason is that there is no central database that tracks that number. Deeds that indicate a transfer of ownership are filed in court. I was surprised that know one digitally compiles data even within a city to ascertain true difinitive foreclosure stats. Case in point. Atlanta Georgia listed some six thousand home destined for foreclosure. At least 900 ended up being foreclosed.
What are the common causes of this seeming epidemic of defaulting on a loan?

Identifying Debt Problems and Solutions
Utimatley it has to do with a large number of homeowners existing on low to modest incomes and contending with a volatile loan product, namely adjustable rate mortgages (ARMs), option ARMs and interest-only mortgages. ARM's fluctuate with changes in the market. Monthly payments are likely to go up as interest rates increase. Adjustable rate mortgage programs can only set one up for problems later down the road. What is the solution. In these situations there is no quick fix. Counselors would advise that they enroll in a debt relief program that allow them to work out a low payment deal with creditors including a consolidation program if able.

Cash Out Refinancing Alternatives
The Alternative to this would be home loan refinancing. Cash out or cash back mortgage refinancing allows the homeowner to enter a new mortgage loan program usually going from an adjustable rate program to a longer 15 - 30 year fixed rate program.

Thursday, January 25, 2007

Refinance Loan Rates - Good Time To Refinance?

Refinance Loan Rates - Good Time To Refinance?

That all depends on the state of rates compared to the average interest rates secured on home purchase loans. At present the 30-year fixed-rate mortgage averaged 6.25%, declining from the previous week, according to Freddie Mac's latest interest rate survey. But the 5-year Treasury-indexed hybrid adjustable-rate mortgage average reportedly stepped down 4 BPS over the week. Meanwhile, mortgage application volume dropped 8 percent, the Mortgage Bankers Association announced.

Rising Interest Rate Debt
Carrying large home loans along with interest rate debt has been a real problem for midle america. In December, 109,652 properties nationwide entered some stage of foreclosure, RealtyTrac recently announced. The month's activity was an improvement over November, the data indicate. The national foreclosure rate was one new foreclosure filing for every 1,055 homes. A roundtable discussion at a real estate conference last week in New York focused on growing foreclosure filings. One panelist predicted foreclosures will jump 25 percent in 2007.

Fixing Fixed Mortgage Rates
Any end in sight. No. But many loans entering foreclosure can be sold or modified before the lender gets them back. Fixed mortgage rates are expected to remain at 6.5 percent as the 2007 closes. Existing-home sales will decline by about 7 percent and new home sales 8 percent relative to 2006. Both categories are projected to rebound in 2008 by about 3 percent and a further 1 percent in 2009.

Home Refinancing Reduces Interest Rate Burdens
Folks seeking to lower the burden of high rates would do good to opt for home refinancing while rates are at present levels. Lenders are still offering home loan rates under 5.50 which could prove a big saving for homeowners and a preventative alternative to foreclosure and bankruptcy. 

Tuesday, January 2, 2007

Will A Refinance Wave Revival Take Place In 2007?

Will A Refinance Wave Revival Take Place In 2007?

Many are wondering if the current state of the economy is swelling to produce a new refinance wave. Recent news and economic reports reveal a plausible possibility of a significant increasing in refinancing providing mortgage rates take another deep dip as it did in recent weeks.

The Market Composite Index
The Mortgage Bankers Association (MBA) reports that refinance applications hit highest levels in over a year. The Market Composite Index, a measure of mortgage loan application volume, was 721.2, an increase of 11.4 percent on a seasonally adjusted basis from 647.6 one week earlier. On an unadjusted basis, the Index increased 10.2 percent compared with the previous week and was up 22.2 percent compared with the same week one year earlier.

Refinance Index
The seasonally adjusted Refinance Index increased by 15.8 percent to 2304.4 from 1989.7 the previous week and the Purchase Index increased by 8.7 percent to 463.8 from 426.6 one week earlier. The Refinance Index is at its highest level since September 2005 

Refinance Activity VS Mortgage Activity
The Mortgage Bankers Association (MBA) reports:The substantial decline in mortgage rates over the past six months, greater than 80 basis points in total, has led to a significant increase in refinance activity. The reports continues to point out that the refinance share of mortgage activity increased to 52.6 percent of total applications from 50.1 percent the previous week. The refinance share is at its highest level since April 2004.

How will this impact home refinance activity? If competitive refinance rates remain below 6% expect a significant increase in home refinancing following the sensation produced by the next Fed rate cut.