The Mercury News
The housing crisis has caught up with people whose wealth helped them hang onto their houses longer.
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http://www.mercurynews.com/business/ci_19899224
The New York Times
Fannie Mae and Freddie Mac recently extended their foreclosure forbearance programs to give short-term aid to unemployed homeowners, but housing counselors warn that these borrowers will need to look at longer-term solutions.
Making sense of the story
- In a forbearance program, a lender agrees not to foreclose on a property and gives the borrower several months’ grace from or reduction in monthly mortgage payments. The programs work best for temporary setbacks, like job loss, health problems, or natural disasters.
- There are drawbacks to the forbearances though. The most-significant drawback is a larger total debt from the smaller payments. The unpaid balance continues to increase during this time.
- The new temporary mortgage payment is often set to 31 percent of the household income; in some cases lenders agree to accept no payments. Fannie Mae’s extended unemployment program, first offered in the fall of 2010, limits any nonpayment or other forbearance plans to one year, with the second six months requiring approval by both Fannie Mae and the lender.
- However, even with the program in place, the lender could still report a mortgage as delinquent, which could adversely affect the borrower’s credit score.
- Because some agreements add onerous term and conditions, homeowners should also consult with a housing counselor certified by the Dept. of Housing and Urban Development.
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http://www.nytimes.com/2012/01/22/realestate/mortgages-a-reprieve-for-unemployed-borrowers.html?_r=1&ref=realestate
The New York Times
Interest rates are the lowest in decades, enticing many borrowers to shop for a loan. Mortgage lenders adjust their rates based on perceptions of risk, so unless the borrower can show they’re a low-risk individual, the borrower is unlikely to qualify for a rate that matches those seen in recent advertisements and headlines.
Making sense of the story
- The rates quoted are averages drawn from a variety of financial institutions, and lenders use varied approaches to set them. Consumers who want to try for the lowest rates available need to consider basic factors, such as credit score, points, property type, down payment, and length of the loan.
- Credit score: The ideal borrower has a FICO score of 740 or higher, which puts the individual in the best place for pricing.
- Points: The lowest rates usually are decreased by paying a fee called a point, or 1 percent of the loan amount. Borrowers may buy points in order to get the best rates at many banks. Points might make sense depending on the borrower’s financial situation and how long they expect to stay in the home.
- Property type: Borrowers planning to buy a duplex or a four-unit build likely will have a higher interest rate. Condominiums also may have a rate premium rate, especially if they are newer or the down payment is less than 25 percent. Lenders also may charge more if the borrower is not planning to live in the home.
- Down payment: Borrowers who put down at least 25 percent are more likely to obtain the best interest rates. Lenders offer different breaks on rates if equity in the property is higher, so borrowers should ask what is available.
- Length of loan: Borrowers who are likely to move in a few years may want to look into an adjustable-rate loan with a low interest rate fixed for a few years, and adjusted afterword.
Read the full story
http://www.nytimes.com/2012/01/15/realestate/mortgages-shopping-for-the-best-rates.html?_r=1&ref=realestate
The New York Times
With interest rates at historic lows, the expansion of a federal refinancing program could help more homeowners who owe more than their property is worth move out of higher-rate or adjustable loans into something more affordable and stable.
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http://www.nytimes.com/2011/12/18/realestate/expanding-a-federal-refinancing-program.html?_r=1&ref=realestate
SmartMoney
Changes are in store for the way reverse mortgages are processed that might make it more difficult for some borrowers to qualify.
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http://blogs.smartmoney.com/encore/2011/11/22/new-barriers-to-reverse-mortgages/
