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Tips for Paying Down Your Motgage Fast

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Pay Your Mortgage Off Faster!Whether you have an FHA loan or a private mortgage from the bank down the street, the idea of paying off your loan is no doubt attractive. If you’re in a good place financially, there are ways to take your 30 year mortgage and pay it off in half, or even a third of the time, without breaking your budget.

1. Increase Your Monthly Payments

The quickest way to chip away at your mortgage is to increase the amount you pay each month. Even if it’s just by a little each month, you’ll be getting ahead of the game. If possible, try to make an extra full payment once in a while, thus reducing the number of payments you’ll owe. While this is often a money management issue, if you’ve been given a bonus at work, or added income to your home, consider devoting more of these funds to your mortgage payment and less to other spending.

2. Renegotiate the Terms of the Loan

Depending on your loan, you may be able to renegotiate certain terms in order to facilitate faster repayment. If you are able to get a lower interest rate, this will lower your monthly payment. The trick is to continue paying the same amount as before. This acts in the same vein as increasing the amount you pay each month. Additionally, speaking to a financial consultant can help you understand bank-specific tricks to pay off your mortgage faster.

Keep in mind, the goal of these tips isn’t to encourage you to live beyond your comfort level. Even if you can only afford to put a little more toward your mortgage each month, that’s okay, you’re still working to pay off your loan sooner rather than later. Working to paying down your mortgage earlier may just allow you to live with limited housing costs during your retirement.

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What To Expect When You Take on a Mortgage?

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Mortgage BasicsThe mortgage application process can be daunting for first-time home buyers. Knowing what to expect can help them to prepare for it. The mortgage process should begin as soon as you start looking for a home and it does not end until you take possession of your new home.

Step One: Applying and Getting Pre-Approved for a Mortgage

In order to shop for a home, you need to know how much you can afford to spend. The mortgage pre-approval process gives you that estimate, but it also gets a lot of the legwork out of the way. You will need to bring proof of income, and other appropriate documentation when you get pre-approved for a mortgage. This is only needed once, so when you actually need to finalize your mortgage, your lender does not need to go through that part of the process again.

Step Two: Finding and Assessing the Home

Once you find the right home, there is a step in the mortgage process that must take place. Your lender must approve the mortgage and they want to ensure that the value of the home is worth their loan. This means that a property appraisal will be done. Depending on the lender, arranging it may be up to the home buyer or they may take care of it. In either case, the home buyer often has to assume the cost. Provided the home is valued as high as the bank is being asked to lend based on your offer price as a buyer, the loan should be issued.

Step Three: Closing On Your Home

If anything changes between the time you have put an offer on your home and closing, a lender can choose not to honor a loan. Substantial changes in income, major purchases and more can all be problematic if it may impact a buyer’s ability to afford the home according to lender’s requirements. Home buyers should be aware of this so they proceed cautiously with their finances before closing as nothing is final until that pen has been put to paper.

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Consumer Confidence and Case-Shiller Index Update

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Consumer Confidence Numbers Released

The Conference Board Consumer Confidence Index, remained essentially unchanged in September after declining sharply in August. The index data came in at 45.4 which is up slightly from 45.2 in August. In other words, the index is showing that consumer confidence is unchanged, which sounds about right.

Case-Shiller Home Price Index

The widely watched Standard & Poor’s Case-Shiller Home Price Index increased for the fourth consecutive month in July as the index rose 0.9 percent in July. The index data shows that 17 of the 20 metropolitan cities in the index posted gains from the previous month. This also indicates that home prices are currently in a sideways pattern, in the short term at least.

Economic Calendar for Week of September 26, 2011

  • Monday – New Home Sales
  • Tuesday – Consumer Confidence, Dennis Lockhart from the Fed speaks
  • Wednesday – Durable Goods Orders
  • Thursday – GDP, Jobless Claims, Pending Home Sales Index
  • Friday – Consumer Sentiment

Mortgage Rate Update

Mortgage rates have come off their all time record lows of last week. This means that there is still an opportunity to lock in some of the lowest rates in history. There is a much greater chance of rates going up as opposed to going down, so if you are interested in learning about how you can benefit from the current market, we can help.

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Yet Another Record Breaking Week for Mortgage Rates

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Record Low RatesMortgage rates set record all time lows yet again this week on the back of more global fears about European debt default and general anxiety over the U.S. economy as a whole. While employment is an issue for many and economic data as a whole has been negative as of late, the levels that mortgage rates are currently at present a silver lining for homeowners and to be homeowners in the United States.

Fed Released Report on State of 2010 Mortgage Market

This week also marked the release of a report by the Federal Reserve about the 2010 Mortgage Market. Findings in this report can help shed light on some of the issues that borrowers might facing today.

According to the report, there would have been 2.3 million more refinances if not for stricter underwriting guidelines and borrower home equity issues. As borrowers have borrowed more against their homes and their home values have decreased, they are left with less equity, which may put them outside of newer refinance guidelines for home equity requirements.

From the Federal Reserve Report on the Mortgage Market in 2010:

“We estimate that, in the absence of home equity problems and underwriting changes, roughly 2.3 million first-lien owner-occupant refinance loans would have been made during 2010 on top of the 4.5 million such loans that were actually originated.”

The inability to refinance is especially a problem in states that were hardest hit by foreclosures, where home prices have declined the most, the report shows.

In Arizona, California, Florida, Michigan and Nevada, 6.4 percent of borrowers with credit scores between 680 and 719 were able to refinance in 2010. In other states, 9.7 percent of borrowers within the same score range refinanced.

Mortgage Rates in the Week to Come

The upcoming week has a a few relevant economic reports that may move mortgage rates. These include the August New Home Sales report, Consumer Confidence, Durable Goods Orders, Jobless Claims, GDP and more. We will be reporting with a full economic calendar on Monday.

The Window of Opportunity is Officially Open, Don’t Let it Close On You

This week presented a unique opportunity for homeowners on the sidelines that have not already taken advantage of record low mortgage rates. As with any window of opportunity, there may be a limited time in which you can get rates at their current low levels. We can help you understand which programs fit your needs the best and help you lock in some of the lowest mortgage rates in history.

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Federal Open Market Committee Update

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FOMC SealThe Federal Open Market Committee (FOMC) concluded its two day meeting today with a 7-3 vote to leave the Fed Funds Rate (the rate at which lending institutions lend to each other) unchanged within its current target range of 0.00%-0.25%. This Fed press release sheds some light on the FOMC’s current observations of the market and how it will be adjusting its activities moving forward.

From the FOMC Press Release:

Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased. Investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.

Since the Fed sets monetary policy and participates in other activities such as buying Treasury debt, their activities can significantly impact the mortgage rates and the economy as a whole. As the Fed has implemented various policies to help push the economy out of recession, maintaining these policies for an extended period of time can do more damage than good.

FOMC Meeting Takeaways

  •  Moving forward with “Operation Twist”: This economic policy may lead to even lower mortgage rates. In short, the Fed is purchasing more long-term securities in an attempt to keep downward pressure on long-term interest rates, which also affects mortgage rates.
  • Unemployment “remains elevated”
  • Investment in non-residential structures is “weak”
  • Business Investment in equipment and software continues to “expand”
  • Inflation appears to have “moderated”
  • Economic growth “remains slow”
  • The housing sector “remains depressed”

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Mortgage Update for the Week of September 19, 2011

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European CrisisThis weeks starts with mortgage rates near the all time lows reached a couple of weeks ago after a slight tick upwards last week. Markets were watching the European debt crisis last week and that concern is the focus today for many traders as the markets are watching to see if Greece can avoid default. If Greece cannot achieve a positive outcome, default would negatively affect other nations in the European Union, which are already dealing with their own financial and debt related crises.

FOMC Meeting Will Move Mortgage Rates

Tuesday marks the start of a two day FOMC (Federal Open Market Committee) meeting, which is expected to announce new stimulus for the US economy at its conclusion. The markets will be carefully watching the FOMC announcement and moving accordingly, expect volatility around any announcements made by the FOMC.

Existing Home Sales and Housing Starts Data

Other reports expected to move the market and mortgage rates this week are data being released for Existing Home Sales and Housing Starts. These reports may also contribute to mortgage rate volatility.

Economic Calendar for Week of September 19, 2011

  • Monday – Housing Market Index
  • Tuesday – FOMC Meeting Begins, Housing Starts
  • Wednesday – Existing Home Sales, FOMC Meeting Announcement
  • Thursday – Jobless Claims, Leading Indicators, FHFA House Price Index
  • Friday – John Williams from the Fed Speaks

Mortgage Rate Locks and Market Volatility

This week will likely be very volatile. This means that if rates make a move up, it will be fast and decisive, which means you will not have time to lock in your rate once such a move has started. Since rates are right at all time record lows, now is the time to lock in your rate, to hold off is simply gambling, with much more to lose then gain. We can help you understand what loan is right for your needs based on your current financial profile and future goals.

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Mortgage Mistakes Responsible for Foreclosure

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Foreclosure mistakes to avoidWith foreclosures occurring in record numbers across America over the past few years, many borrowers wonder what they can do to avoid ending up in a similar situation. The recent housing crisis can be in part attributed to lender mistakes and in part due to the mistakes of borrowers, these include the following:

Foreclosure Mistakes by Borrowers

Common borrower mistakes that can lead them to foreclosure include:

  • Not Checking the Interest Rate – Some buyers do not pay attention to the interest rate that they’ve signed up for. They may calculate their affordable mortgage amount based on an online approval amount or calculator. If they’re a higher risk borrower, they may end up with a higher interest rate by the time they actually have a mortgage commitment.
  • Not Understanding What an Adjustable Interest Rate Means – Buyers often get caught up in the idea of a adjustable interest rate when interest rates are low and don’t think about the fact that rates could go up again. They can also end up in an adjustable loan with an inappropriate time frame for their needs. When this occurs, home owners may no longer be able to afford their mortgage.
  • Buyers Have To Borrow Their Down Payment – Individuals that require a down payment, but don’t have the cash may choose to borrow the funds. This means that they will struggle to pay back a loan as they pay a mortgage they can only just afford.

Foreclosure Mistakes by Lenders

There have been times when lending criteria has been too flexible, especially when sub-prime loans are concerned. Lenders may not pay appropriate attention to debt ratios, the source of cash that home buyers use for a deposit, or they may not thoroughly explore a buyer’s credit history. As the wave of foreclosures has hit in the past couple of years, many lenders have also been overwhelmed with the amount of work and paperwork associated with the foreclosure process, this has led to lender mistakes which often create a lose / lose scenario for lenders and borrowers alike.

Buyers cannot control the actions of their lenders, but they can inform themselves and make smart decisions to insure that they protect their investments. If you have questions about how to avoid foreclosure or which type of loan is the best for your scenario, we can help inform you so that you make the right decision armed with the knowledge you need.

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Is a Home Warranty Worthwhile?

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Home WarrantiesThe addition of a home warranty in a home buying contract can be a very attractive thing. To buyers it means they’re protected if something happens to their appliances within the time frame of the warranty. For sellers, this investment might save thousands of dollars. However, tricky fine print and the age and functionality of the appliances in the home often leave people questioning if a home warranty is worth the price.

Home Warranties: If It’s Not Broken…

For new houses or homes with new appliances, heating and air conditioning systems, or with other recent repairs, the probability of a catastrophic failure occurring is very low. In these cases if something does need repair or replacing, it’s usually covered by a manufacturer or installer’s warranty. If this is the case, a secondary home warranty might not be necessary.

On the other hand, if there is less than a year on any particular warranty when you purchase the house, it might be a good investment. At the very lease it would be something to consider asking the seller to pay for as part of the purchase price. Should you decide to take the home warranty though, understand the process of making claims and what exactly the policy covers.

Read the Fine Print of a Home Warranty

Like all insurance policies, there are stipulations as to how you can use a home warranty. Some policies will only cover repairs versus full replacements, and some policies will only pay for replacements that fall in a certain price point. Find out if your policy allows you to choose the repair service, or requires you to go through the warranty company.

A home warranty can have its benefits for both buyer and seller, as long as you’ve done the research and know what to expect.

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Mortgage Outlook for the Week of September 12, 2011

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Mortgage rates continued to improve last week marking yet another round of record breaking low mortgage rates. Last week also marked a continuation of previous themes in the market in regards to concern over the US Economy and the Weakness of European Markets, with Greece being the focus of concern, once again.

This week features multiple treasury auctions and traders will be watching the results of the Retails Sales and Producer Price Index data that is being released on Wednesday. This data will help them understand the state of consumer spending and inflationary pressures that might exist among producers. Any one of these events may impact mortgage rates negatively or positively.

Economic Calendar for Week of September 12, 2011

  • Monday – Richard Fisher from the Fed Speaks
  • Tuesday – Redbook, Treasury Budget
  • Wednesday – Producer Price Index, Retail Sales
  • Thursday – Consumer Price Index, Jobless Claims, Industrial Productions, Philadelphia Fed Survey
  • Friday – Consumer Sentiment

Record Low Rates Are Here Now, But For How Long?

It is a given that rates will move up and move up fast, even from the record lows we are currently at. The big question is WHEN will they move up? The truth is that nobody knows. One thing is for sure though, you will be very unlikely to get in a lock fast enough once rates do move up, which means now is the time to capitalize on the record low rates that are available today. We can help you understand how this market can benefit you and which loan might be best for your current situation.

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Obama Outlines New Intent to Help Homeowners Refinance

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In his White House Speech last night before a joint session of Congress, President Obama revealed his intent to help American homeowners refinance their mortgages to take advantage of the historically low rates we are currently seeing.

While President Obama did not touch on specifics, White House officials have said the U.S. Treasury was having talks with both Fannie Mae and Freddie Mac and their regulator, the Federal Housing Finance Agency, on potential ways to open up refinancing as an option for more Americans.

From the President’s Speech:

“To help responsible home owners, we’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” Obama said during his speech. He then signaled that said that such a move would “put more than $2,000 a year in a family’s pocketbook and give a lift to an economy still burdened by the drop in housing prices.”

Concern Moving Forward, Can This Work?

While the President’s intent is surely appreciated by many, there is concern about the ability of such actions to actually come to fruition. A prime example of government intervention that failed to achieve its intended goals is HARP, the Home Affordable Refinance Program launched in 2009. It was designed to allow homeowners that would normally not qualify with little to no equity in their homes to take similarly take advantage of low interest rates, with the requirement that they had loans backed by Fannie Mae or Freddie Mac. The goal of the program was to help “four or five million” home owners, but in reality only 838,000 homeowners had been helped as of June.

Do You Need Government Intervention or Can you Lock In A Low Rate Now?

If you are looking for the answer to this question, we can help. You may not need to wait and may be eligible now to lock in historically low mortgage rates now. If in doubt, please contact us for a free consultation where we can help you understand your options.

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