Mortgage-Guy.com

Mortgage preapproval is the first step in looking for a home. Many homebuyers think that the first step is actually going out to open houses and searching the market, but getting your mortgage pre-approved is the smarter decision.

According to SmartMoney, pre-approved letters are prepared even before you’ve picked out your home. This allows buyers to know exactly how much they can borrow based on their current financial situation.

Times have changed, and buying a home today wasn’t like how it was when real estate was at its peak. It’s not like choosing furniture anymore. Getting a mortgage pre-approval will help the seller know if you are capable of buying, making the process go much more quickly.

Mortgage Preapprovals Wise for First Time Home Buyers in Current Market

Homebuyers today can potentially save several times more money in interest costs than buyers who took out a mortgage in early April and claimed an $8,000 homebuyer tax credit.

Yet buyers, who rushed to meet the April 30 deadline for the federal tax credits, appear much less eager to borrow at the lowest interest rates in 60 years.

Mortgage applications for home purchases are 42 percent below the pace seen in April, according to the Mortgage Bankers Association. Home resales dropped 27.2 percent in July from June, according to a report Tuesday from the National Association of Realtors.

Someone taking out a $240,000 mortgage today at a 4.42 percent interest rate could save $33,287 in interest costs over the life of a 30-year loan. That’s four times the $8,000 credit used by a first-time homebuyer who financed at 5.21 percent in early April.

So why aren’t more people buying now?

Timing offers one explanation. Buyers earlier this year, not knowing rates would drop, took the best deal available to them at the time.

That soaked up future demand, which more optimistic forecasts hold should return as lower rates persuade buyers to get off the fence.

Because few people stay in a home or keep a mortgage for 30 years, the time needed for monthly mortgage savings to match the $8,000 credit is another consideration.

On a $240,000 mortgage, a buyer would need to stay put for almost six years for monthly mortgage-payment savings

Ken Blaudow has felt the pain of the housing finance industry turmoil.

The owner of Indy Mortgage in Indianapolis had 85 employees originating home loans in 2003. Now he has three and is about to give up his leased office in Castleton and move his company into two bedrooms of his house.

“It’s drastically down,” he said of his industry. “And there are a lot of funky new rules.”

At least Blaudow’s still around.

Most of the mortgage brokers that seemed to populate every office building and commercial street in Indianapolis and many other cities just five years ago have vanished.

The number of Indiana mortgage brokers and loan originators licensed by the state has plunged 73 percent since 2005, from 4,008 to 1,080, according to the secretary of state’s office.

Brokers and loan originators find lenders for people seeking a mortgage on a new home purchase and charge a fee for that service.

With a sharply reduced membership base, the trade group that represented them, the Indiana Association of Mortgage Brokers, is gone.

“The industry most assuredly has been thinned out,” said Douglas Brown, an Indianapolis attorney and the trade group’s former general counsel.

Much of the decline has been due to the implosion of the housing sector since 2007. Prices and sales plunged during the recession. Foreclosures hit record highs almost everywhere.

As government rushed in to respond

NEW YORK — Mortgage rates fell to the lowest level in decades for the ninth time in 10 weeks, as concerns grow that the economy is weakening.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.36 percent this week, down from 4.42 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on a 15-year fixed loan dropped to 3.86 percent from 3.90 percent the previous week. That’s the lowest on record starting in 1991.

Rates have fallen since spring as investors shifted money into the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

The low rates have fueled borrowers to refinance their home loans. Refinancing is at its highest level since May 2009 and made up 82.4 percent of all new loan activity.

However, low rates haven’t budged home sales. Those have been stymied by high unemployment, slow job growth and strict credit standards, and have dropped sharply since the expiration of home-buying tax credits in April.

To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.

Mortgage rates fell to the lowest level in decades for the eighth time in nine weeks, a sign that investors are concerned about the weak economy.

The average rate for 30-year fixed loans this week was 4.42 percent, down from 4.44 percent last week, mortgage buyer Freddie Mac said Thursday. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on 15-year fixed loans dropped to 3.9 percent, down from 3.92 percent last week and the lowest on records dating back to 1991.

Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields.

Falling rates have pushed refinancing of home loans to the highest level since May 2009. But it’s still lower than during the first three months of that year, when rates first fell to around 5 percent.

Low mortgage rates, however, have failed to spark home sales. They remain hobbled by the weak economy and tight credit standards.

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Mortgage rates drop to lowest level in 30 years

A special series from The Street.com details the problems homeowners face when seeking mortgage-rate modifications.  This is an eye opening article.

NEW YORK (TheStreet) — A year and a half after the Obama administration unveiled a sweeping rescue plan for homeowners, surprisingly few have been rescued.

The $275 billion “Making Home Affordable” program had the potential to reach up to 9 million troubled homeowners, according to initial estimates. Instead, paperwork delays, confusion over eligibility requirements and hesitance of banks to participate has left millions out in the cold.

• Just 24% of borrowers eligible for a federal mortgage-modification program have received permanent mortgage modifications. While 1.6 million homeowners were eligible as of the last report, more than half a million had abandoned the program, seeking other solutions or falling victim to the housing market’s collapse.
• Since its inception in February 2009, nearly 6 million homes have received foreclosure filings, according to RealtyTrac — despite a foreclosure-moratorium that predated the program and lasted through March.
• In desperation, homeowners have handed millions of dollars to shysters promising fast-track solutions. No less than five federal agencies and attorneys general in more than 30 states have taken action against thousands of such individuals. Yet the government response has been uncoordinated and unhelpful to those who most need assistance.

Here is the original post:
Mortgage Mayhem: Americans Seek Do-Over