Mortgage giant, Freddie Mac announced this week that mortgage rates have hit an all time low for the 9th time in 10 weeks. Mortgage rates on 30 year fixed rate mortgages have continued to decline since the spring of this year. Although the rates have continued to fall, home sales don't seem to be moving as the unemployment rate and high credit standards seem to be blocking forward motion in sales.

Although the expiration of the FED program that pumped $1.25 trillion into mortgage backed securities spiked concern with economists that mortgage rates would rise significantly, the European Debt crisis caused investors to shift funds into safer US Treasury bonds.  As the mortgage rates are so closely tied in with long term treasury bonds, they can change drastically even on a given day.

Freddie Mac collects rates from lenders across the nation weekly Monday through Wednesday. The rates this week came in at 4.36%, reflecting the lowest rates since Freddie Mac began tracking rates in 1971.   

 

If you're a veteran who served at least 90 days of active duty during a declared war, or over 181 days of peace time service, you are eligible for a VA loan to help purchase a home. Note that only active veterans or those honorably discharged qualify.

First things first, go online to the Department of Veteran Affairs: Regional Loan Centers and find the nearest loan center in your area. Give them a call. This center can then provide you with a list of VA approved lenders to contact. Also ask if they have any recommendations. Not all approved VA lenders are created equal.

You can also visit the VA Mortgage Center: VA Loan Eligibility Requirements online to review any requirements about which you may be uncertain. Call several of the approved lenders and get a feel for their level of experience. If you can get a face-to-face meeting, all the better. Choose the one that you feel most comfortable with, and that illustrates the greatest amount of hands-on experience with VA loan processing.

While you can only have one active loan at a time, currently you can obtain up to $417,000 toward a house (as of 2010). Thanks to all who serve and happy house hunting.

For anybody who thought they would lose their opportunity to claim the tax credit because their loan did not close by June 30th is in luck!

The tax credit deadline had been extended until September 30, 2010. You still would have to be in contract by April 30th but now have until September 30th to close.

Good Luck Everyone!

Sometimes called a reverse annuity mortgage, a reverse mortgage is one in which the homeowner receives a lump sum or periodic payments from the bank based on the house’s equity. This mortgage may or may not have a line of credit attached to it as well. When the property on the mortgage sells, or the home owner dies, the lender should receive the full loan amount including interest. If there is extra equity in the property, that goes to the borrower (or to the estate).

Unlike a 2^ndmortgage, the borrowers debts vs. income, nor the amount of monthly mortgage payments really don’t figure into this loan. That’s because the reverse mortgage pays the lender and the most that can be borrowed equals the value of the home (with adjustments for the owner’s age and the current interest rates). This loan is not due for as long as the borrower stays in that property. Note however, that the borrowing ape is still responsible to pay taxes and normal monthly bills. And if you get a HUD reverse mortgage (or an FHA insured one) the bank cannot foreclose on the house.

Qualifying or a HUD reverse Mortgage:

In order to qualify for an insured reverse mortgage you must be at least 62 years old. Thus many people hitting retirement consider this option. You must have either a very low current mortgage balance or already own the home completely. You also must be a resident in the home.  Additionally, for the borrower’s protection, it’s mandated that all of the alternatives available get reviewed with you before closing the reverse mortgage. At this time the specifics of the loan’s costs are also disclosed.

In terms of the house itself, single family houses and 2-4 unit buildings qualify including condos and townhouses. However a condominium must have FHA approval

Receiving the Money

You have five options in terms of how you will receive the money from a reverse mortgage. There’s a term mortgage where you get a set amount over a pre-designated period of time. There’s tenure, where you get regular monthly payments as long as you’re living in the house. There’s also a line of credit, modified term (line of credit with monthly payments) and modified tenure (monthly payments with line of credit).

Note that the money received from a reverse mortgage is not subject to taxes and won’t impact SSI or Medicare. Bear in mind, however, that over time the reverse mortgage impacts the equity value of your home.

There are originating fees involved, and sometimes other service fees that will be incurred during processing. If for some reason you change your mind about taking a reverse mortgage you’ll have three days after signing your paperwork to cancel without penalty. This cancellation must come in writing.

ARM (or adjustable rate mortgages) as the name implies are loans where your interest rate varies. There are some instances were having an adjustable rate mortgage is very useful, and other times when it’s very risky for home-buying apes. If you’re considering an ARM, here are some basics you should know ahead of time.

How its calculated:

Most adjustable rate mortgages tie their rates to a specific index be it the Prime Rate or LIBOR. As that index goes up and down, your interest rate follows. This in turn changes what you pay monthly. Not knowing that monthly amount with certainty can make some buyers rightly nervous. Nonetheless there are some benefits to ARMs.

Benefits of Adjustable Rate Mortgages:

The key reason people choose an ARM is in the hopes that their monthly rate will actually decrease. Because of the risks involved in adjustable rate mortgages your loan usually starts out with lower interest too. For a bank, offering an ARM means their lending won’t get stuck below market values as it could with a fixed rate mortgage.

Risks of ARMS

Just as easily as an index goes down, it can also go up. Over time, that upward movement could leave you with a monthly payment that’s beyond your financial limits. That’s why its so important to choose the correct ARM for your situations. For example, you can get an ARM that has a limit on how much the interest rate on your loan can change (or on the upper limit of your monthly payment).  

Caps come in two forms – one being a lifetime cap and one being a period cap. Period caps vary between one year, 7 years, and 10 years.  And while cap restrictions offer some amount of protection they too have a problem. Specifically your loan could begin experiencing negative amortization because rates have gotten too high and you’re not paying the amount of interest necessary due to the cap.

Risk vs. Reward

If you hold your property for a long time an Adjustable Rate Mortgage might save you money. Nonetheless payment adjustments can prove very volatile and become more than your daily budget can bear. Make sure to discuss the benefits and risks with your financial institution before taking the leap into an ARM.

A free five day mortgage modification seminar will take place on Feb 25 through March 1, 2010 at the Palm Beach County Convention Center in West Palm Beach, Palm Beach County, Florida.  The seminar will be held by the Neighborhood Assistance Corporation of America (NACA) in an effort to reach out to all Florida residents in need of restructured mortgages as well as potential homebuyers that are having difficulty receiving financing.

Be sure to be prepared if you are planning to attend.  Bring a mortgage statement, proof of income, a signed hardship letter, proof of homeowner insurance and property tax information.  According to CJ Harris, organizer for the NACA, some solutions can be worked out in a day depending on the situation of the borrower.

For more information visit the NACA website or feel free to call (888) 499-6222.