MORTGAGE & FINANCE Mortgage applications leap as rates fall

The number of mortgage applications for the week ending March 6, 2013  increased 14.8 percent on a seasonally adjusted basis from one week earlier, the Mortgage Bankers Association announced today. On an unadjusted basis, the Index increased 15 percent compared with the previous week.

The Refinance Index increased 15 percent from the previous week to its highest level since mid-January. The seasonally adjusted Purchase Index increased 15 percent from one week earlier.  And unadjusted, the Purchase Index increased 18 percent compared with the previous week and was 17 percent higher than the same week one year ago.

The refinance share of mortgage activity held at 77 percent of total applications. The adjustable-rate mortgage share of activity also held at 4 percent of total applications.

Interest rates for 30-year fixed-rate loans with conforming balances, decreased to 3.70 percent from 3.77 percent. Interest rates for jumbo loans also decreased to 3.80 percent from 3.93 percent. Rates for Federal Housing Administration-backed 30-year fixed-rate loans decreased to 3.47 percent from 3.54 percent and 15-year fixed-rate mortgages decreased to 2.96 percent from 3.03 percent, the lowest contract rate since the week ending January 25, 2013.

http://therealdeal.com/blog/2013/03/06/mortgage-applications-leap-as-rates-fall/

MORTGAGE & FINANCE: Four easy ways to get a low mortgage rate

Are you ready and eager to buy your first home, but not sure if you'll qualify for those historically low mortgage interest rates that are splashed across every real estate section?

Well, you are right to be excited, since rates really are extremely low by historical standards. In fact, the average interest rate on a 30-year fixed-rate mortgage was just 3.57 percent as of February 5, 2012 - down from 4.85 percent just two years ago - according to Mortgage News Daily, an organization that provides housing news and analysis.

These low rates, combined with the relatively low prices of homes, make now an attractive time to buy, says Jim Duffy, a mortgage banker with Cole Taylor Mortgage. "It's a great time to buy because it's a perfect storm: rates are at their lowest point ever and housing prices are depressed," he says.

So keep reading to find out what some mortgage experts say about how to take your best shot at a record-low interest rate.

Tip #1: Improve Your Credit

Do you know what your credit score is? You probably should, because for any lender considering you for a mortgage, it's the first thing they're going to check, says Chris L. Boulter, president of Val-Chris Investments, Inc., a California company specializing in residential and commercial loans.

So what does your credit score have to do with your mortgage rate? Basically, the higher your credit score, the more likely you are to get a better interest rate.

FICO scores, which Boulter says is the scale most banks use, run from a low of 300 to a high of 850. At a minimum, Boulter says you'll want a score of at least 720 to 740 to qualify for today's historically low rates.

But don't fret too much if your score isn't quite at the gold standard. Duffy says you can still qualify for a mortgage with a score as low as 620, but you'll likely have to pay up to a half a percent higher on the interest rate.

[Got a good credit score? Click to compare mortgage rates now.]

Wondering how you can improve your credit score in the short term? Duffy says you can get an immediate 10 to 15 point jump in your credit score just by paying your credit cards down to approximately 30 percent of their limit.

For instance, if you have a credit card with a $3,000 limit and a $2,000 balance, your credit score is negatively affected. Paying the balance down to $1,000 might make the difference in qualifying for a mortgage or getting a better rate, he says.

Tip #2: Decrease Your Liabilities

No, we're not saying get rid of your teenager - no matter how attractive that idea may be. We're talking about liabilities that lenders worry about: things like car loan payments, credit card payments, school loans, etc. That's because these liabilities determine your debt-to-income ratio, or how much your total debt is as a percentage of your gross monthly income.

Liabilities impact your ability to qualify for a mortgage because the lenders measure your liabilities against your monthly income to determine how big a mortgage you can afford.

So what should your debt-to-income ratio be to qualify for the lowest mortgage rates? Duffy and Boulter both say that this ratio needs to be 40 percent or lower - and that includes your prospective new mortgage payment - along with property taxes and any private mortgage insurance (PMI).

By decreasing your liabilities and ensuring you have a low debt-to-income ratio, you'll hopefully be putting yourself into a smart financial situation and only borrowing what you can afford.

Tip #3: Put at Least 20 Percent Down

We're not sure if you noticed, but banks aren't exactly risk-takers, at least when it comes to

THE ECONOMY: Krugman Says Fed Low Rates Key to Housing Rebound: Tom Keene

Nobel Prize-winning economist Paul Krugman said the Federal Reserve must keep interest rates low to sustain the U.S. housing recovery.

“We have the beginnings of a housing recovery, it’s just starting to kick in,” the Princeton University economics professor said in an interview today on “Bloomberg Surveillance” with Tom Keene and Sara Eisen. “If the Fed were to raise rates, they would kill that.”

Central bank policy makers have said they will keep their benchmark lending rate near zero as long as unemployment remains above 6.5 percent and inflation is projected to be no more than 2.5 percent. U.S. unemployment rose to 7.9 percent in January, even as the economy added 157,000 jobs.

The housing market has been a bright spot in the economy, with housing starts rising 12.1 percent in December to cap the industry’s best year since 2008.

Krugman called the housing recovery the “best chance” the U.S. economy has to expand. The U.S. should have learned from Japan, which “repeatedly aborted its recovery by tightening too soon” during that nation’s own crisis.

The U.S. is already five years into a crisis that mirrors the Asian nation’s so-called “lost decade,” Krugman said. The period in the 1990s saw Japan’s economy slip in and out of recession and grow at an average rate of about 1 percent a year after the collapse of a real-estate bubble.

Like Japan
“We already are Japan-like, we’re worse than Japan ever was,” he said. “The human misery here is much worse than Japan has ever suffered.”

He said the U.S. needs to build infrastructure and that it is acceptable to pump money into the

MORTGAGE & FINANCE: 16 Things NOT TO DO While in the Process of Obtaining Home Financing

You can unknowingly sabotage your home financing goals by making some obvious and not-so-obvious moves with your finances. Check out the list below to see if you know the top 16 things not to do when you are in the process of buying or refinancing. Do not: 

1. Leave an existing job for any reason 
2. Open new bank accounts 
3. Close existing bank accounts 
4. Deposit funds over $300 into a bank account* 
5. Transfer money between accounts, unless receiving complete documentation from your bank, itemizing all transfers 
6. Allow your bank statements to go into a negative balance, even if you have overdraft protection 
7. Buy new furniture, a car, or make any other major purchase* 
 8. Shop for furniture, a new car, or any major items, which may result in your credit being run 
9. Apply for any new credit 
10. Inquire about new credit or better rates on existing credit 
11. Co-sign on any debt with a family member or anyone else 
12. Ask a tenant to move out, or give your landlord notice that you are moving out* 
13. Stop paying credit card debt 
14. Stop paying any bills 
15. Pay a bill in collections. If about to pay a bill in collections from a collection agency, try to pay it at closing** 
16. Have a friend or family member pay for anything related to the purchase of the home (appraisal, earnest money, down payment, etc), since gifts are only allowed under certain

CREDIT: Credit Scores of Potential Homebuyers Are Improving

There have been numerous improvements in the economy and the housing market, specifically in the last few years, and that isreflected in the type of credit ratings carried by potential homebuyers nationwide through the end of last year.

With the slowly improving economy and jobs numbers, many consumers are now finding themselves in better financial shape than they were just a few years ago, and as a consequence, some are now mulling big financial decisions such as a return to the housing market, according to a report from the Federal Reserve Bank of Atlanta based on information in the Home Mortgage Disclosure Act database. In fact, through the end of 2011, the median credit score of a potential borrower who filed a home loan application was up 40 points from the end of 2006, more or less when the housing bubble burst. Further, that was the highest point observed in the past 12 years.

Interestingly, this comes at the same time as borrowers seemed to be more honest about their financial standing, the report said. Prior to the housing meltdown, it was not uncommon for borrowers to intentionally inflate and misrepresent their actual incomes -- and for banks to sign off on loan applications nonetheless. This was a major reason for the real estate crisis in the first place, as borrowers were granted home loans they couldn't afford (often with banks knowing full well that this was the case), then eventually defaulted and were foreclosed upon.

"Comparing home-purchase borrower incomes reported in the HDMA data with income reported by homebuyers in household surveys suggests that incomes on mortgage applications were likely significantly overstated during the peak of the housing boom," the Fed researchers said. "In more recent years, there is no evidence of overstated incomes."

However, despite the improvements, many consumers also faced a continued problem obtaining approval for their loan applications, the report said. Though consumers' median rating improved, the rate at which they were turned down for mortgages did not, holding steady from the 23 percent observed in 2010. Altogether, there were only 7.1 million mortgages approved last year, down 10 percent from 2010 and the lowest since 1995′s 6.2 million.

Consumers who are interested in buying a home may want to make sure their credit standing is as good as it possibly can be before applying, as many lenders say they will keep restrictions tight for some time.
http://realestate.aol.com/blog/2012/11/09/credit-scores-for-homebuyers-are-improving/

THE ECONOMY: Obama's housing scorecard

NEW YORK (CNNMoney) -- The housing market is gaining strength thanks in part to government programs aimed at helping struggling homeowners, the latest Obama Administration Housing Scorecard released Thursday found.

"The Obama Administration's efforts to speed housing recovery are showing clear signs of traction," said Erika Poethig, Acting Assistant Secretary for the Department of Housing and Urban Development (HUD) which releases the report in conjunction with the Department of the Treasury.

Home values are back to levels not seen since the beginning of the Obama administration and the number of homeowners who are underwater on their mortgage is down 11% since last year, the report said. In addition, more than half a million borrowers have had their loans refinanced through government efforts like the Home Affordable Refinance Program this year.

"It is clear that we're making progress. But with so many households still struggling to make ends meet, we have important work ahead," Poethig said.

Another boost to the housing market came last April, when the attorneys general of 49 states and the District of Columbia inked a $25 billion settlement deal with the nation's five largest banks over so-called robo-signing foreclosure abuses. That deal is expected to help another couple of million borrowers reduce their mortgage payments.

Since the administration started rolling out its programs in April 2009, more than 5.4 million borrowers have received aid, the Department of Housing and Urban Development (HUD) said.

Here's a rundown of the government's mortgage relief efforts and how they've fared:

Home Affordable Modification Program (HAMP)

Launch: March 2009

Borrowers affected: As of July 2012, there have been 1.9 million trial modifications started. More than 1 million have made the transition into permanent modifications. Some 235,000 of those have been canceled due to re-defaults or because borrowers sold their homes.

This program enables eligible borrowers to lower their first mortgage payments to more affordable and sustainable levels. Lenders receive incentives to reduce mortgage payments for at-risk borrowers; the target is 31% of income.

HAMP originally fell well short of estimates that it would lower mortgage payments for 3 to 4 million borrowers. And, many early workouts failed as borrowers soon re-defaulted on their loans.

Track record: HAMP's record has improved and re-default rates have declined, but they're still troubling. As of July, nearly 19% of all borrowers with HAMP modifications are at least two payments behind 12 months after their loans were modified.

HAMP modifications have slowed to a crawl lately, with just 17,000 permanent modifications started in July.

The modifications have led to a total of more than $14.4 billion in lowered borrowers' payments, according to the Treasury Department.

Home Affordable Refinance Program

Launch: March 2009

Participants: 1.5 million

This program helps borrowers who are current on their mortgage payments but are having a hard time refinancing their mortgage because they are underwater or owe more on their home than it is worth. The home must be underwater due to falling home prices and the mortgage must be backed by Fannie Mae or Freddie Mac.

Originally, HARP allowed homeowners to refinance if their loan balances were between 80% and 105% of the market value of their home. But after disappointing initial results, the rule was changed to include borrowers with loan-to-value ratios of up to 125%. Later, they removed that cap altogether.

Track record: The changes have helped make HARP one of the more successful government programs. The number of HARP refinancings has accelerated with more issued during the first seven months of the year than in all of 2011.

More than half the loans refinanced in June and July went to homeowners with loan-to-value ratios above 105%.

Second Lien Modification Program (2MP)

Launch: April 2009

Participation: 90,000 borrowers

The Second Lien Modification Program (or 2MP) provides assistance to homeowners who have second mortgages or home equity lines of credit in addition to their primary mortgages.

Many potential mortgage modifications have hit roadblocks because lenders of home equity loans and lines of credit refuse to cooperate. After all, the first mortgage holder typically gets paid first when an underwater mortgage gets modified and there's often nothing left for the

FINANCE: How to Reduce Credit Card Bills Other Than the Debt Relief Options

Though there are various debt relief options through which you may be able to reduce your credit card debts and pay those down too, it is more important for you to use some strategies, that are ultimately going to help with elimination of the debt problems from the root. Through credit card consolidation, you can easily pay down your credit card bills, as these get rolled over into a single debt, with lowered interest rate. In case of debt settlement, it is the outstanding debt amount, which gets lowered. However, if you do not change your habits, there is no point paying down the debts. You will soon end up deep in debt, yet again.

Strategies that may help reduce credit card bills

There are various strategies that may help you with the reduction of the credit card bills or debts. These are:

Reduction in the usage of credit cards – In order to reduce credit card debt, you will first be required to lower the usage of the credit cards. This is supposed to help you put a control over the debt amount or the number of bills from increasing, all the more. Thus, it becomes easier to manage and pay off your credit card bills.

Lowering your expenses at the most – You will be required to try and lower all of your other expenses, which are not that necessary. This too helps you in putting a proper control over the debt amount form increasing. If you can lower the expenses, you may also be able to have more of the free money in hand, which you may be able to use towards bill pay off.

Following a proper budget – A proper budgeting is going to help you with lowering the expenses as much as possible. Budgeting helps you to keep tab of your total income and also the expenses – both static and the variable ones.

Debt relief options which help reduce credit card bills
There is only one debt relief option which does help with the reduction of the credit card debt

MARKET TRENDS: Returning Veterans Hunker Down In Hostile Housing Market

It's tough out there being a military veteran trying to find a job. It's even tougher trying to afford a home - even if they can land a job.

Casualties among military personnel with boots on the ground in the housing market are often disproportionately higher than those among civilians.The Center For Housing Policy (CFHP) offers the latest in a flurry of recent studies that reveal how those who bravely serve to protect the nation - as well as the nations of others - face a steep, uphill battle at home, in the housing market.


Even with access to federal job training initiatives and other programs for returning troops, many of the jobs veterans enter after time on the battlefield offer wages too low to make housing affordable.


CFHP latest "Paycheck to Paycheck" study edition, "Can veterans afford housing in your community?" examines data from the first quarter of 2012 and reveals the gap between wages and the costs of housing, both rental and owned, in more than 200 U.S. metro areas, for workers in occupations targeted by job training programs for returning vets.
"Because many veterans have been off the job market for years while serving multiple tours of duty, they often struggle to find employment," said CFHP researcher and report author Laura Williams.


"In many housing markets, the jobs America's servicemen and women may find waiting for them after deployment do not pay enough to afford the costs of buying a home, and in some markets and for some occupations, veterans cannot afford the costs of renting a modest rental home," Williams added.


CFHP examined housing affordability prospects for workers in five jobs targeted by the

MORTGAGE & FINANCE: Home Equity Lines of Credit, In Context

Mortgages, which were considered "good debt," are being swept into the "debt is bad" category. Home equity lines of credit, which were considered "good mortgages," are being swept into the "debt feeds panic" category, and who knows what’s next?

What’s next for me?The Bank of Canada, which is in charge of keeping us fiscally safe and progressive, has some control over the interest rates consumers pay, but it doesn’t know how the global financial crisis is going to play out. Its winter 2011-2012 quarterly report, "Special issue: Household Finances and Financial Stability Household Finances and Financial Stability," caused a new wave of media "debt" stories and added another layer of panic, but we still don’t know how this will all end.

Where you are financially (and that includes how in debt you are) and which financially-significant moves you want to make in the next year or so, determine how vulnerable you are to short-term interest and property value issues raised in these uncertain times. Your level of financial flexibility will determine whether you can survive anything that comes, or if you’ll find speed bumps ahead.

Are you financially ready for the unexpected - good or bad?

• Do you have a three-to-six-month emergency fund to tide you over if an income problem or sudden expense arises?
• Have you got the money to take advantage of renovation or energy saving programs, or other valuable opportunities?
• Do you have the resources to cash in on travel or car bargains, or will you be cash-poor?

If you answered "yes" to these questions, your financial flexibility will get you through some pretty tough times.

If your "yes" answers relate to being bailed out by a home equity line of creditor HELOC, not by accessing cash and assets, you’re counting on debt flexibility, not financial resources, to preserve what you own and achieve what you want. These and issues like them are precisely why HELOCs are popular. However, if a HELOC is your only financial backup, you may be on shakier ground that you realize.

HELOC Workings

The name "home equity line of credit" explains that property owners borrow against existing home equity, or accumulated real estate value. The lender registers this debt against title to protect its investment, and charges fees and interest to homeowners for the privilege of borrowing their own equity.

Lines of credit can also be extended against income with no real estate involved, but rates and terms may not be as attractive as with HELOCs where the debt is fully secured against real estate. Qualification for a HELOC involves two factors:

Available Home Equity: Lenders decide how much is enough when it comes to home equity. The more equity the property owner wants access to, the more expensive borrowing can get. Usually, borrowing less than 50 percent of market value is easier than trying for more. Lenders valuate property based on sale prices that could be achieved in quick sales in most markets. Lenders use real estate data to project property-value increases over time for

FINANCE: True ways to shrink credit card balance

How much money could be saved with a lower interest rate or increased monthly payments.

The amount you save by transferring your balance to a lower-rate card depends on your old and new interest rates and how much you pay each month. Lowering your interest rate and boosting your monthly payments could shave thousands of dollars off your bills and eliminate months, even decades, of repayments.


Credit card companies must now disclose on your monthly statement how long it will take to pay off your balance if you make only the minimum payment, as well as how much you'll pay in total interest over that time. Say you have a $5,000 balance at 18 percent interest and you make the minimum payment of 2 percent of the balance each month. It will take more than 39 years to pay off your balance, during which time you'll pay more than $13,000 in interest.


"It's so long, some people think it's a mathematical error," says John Ulzheimer, president of consumer education for SmartCredit.com.


One reason it takes so long to pay off the balance is that minimum payments are generally calculated as a percentage of the balance. That means the amount you pay every month shrinks as your balance is reduced. Just boosting your payments to a fixed amount of $200 per month means you'll retire the balance in about 2.7 years and pay a total of $1,314 in interest, even if you continue to pay off the debt at the original 18 percent interest rate.


Combine a larger monthly payment with a lower-rate balance transfer and you can get