Archive for April, 2007
Task Force Takes A Look At Identity Theft
April 30th, 2007
In the spring of 2006, with reports of computer hacks, lost laptops, and other precursors to identity theft increasing, President Bush appointed an Identity Theft Task Force to investigate the problem and suggest solutions.
If you are in the process of refinancing your California home mortgage on the Internet, Computerized Origination fees could cost you as much as $1,300 for your new loan. This happens to homeowners who do not read disclosure statements found on many of the mortgage sites found online. When shopping for a new California mortgage loan you can find the fees disclosed in the licenses and disclosure statements found on the bottom of many of these sites.
What is a Computerized Loan Origination fees? Many of the sites you visit have absolutely nothing to do with mortgage loans. These are businesses that make money generating leads for mortgage companies. They put up a website to collect your contact information and sell “leads” to the highest bidder. There’s nothing wrong with lead generation sites when the fee is paid by the mortgage company or broker; however, many mortgage lenders pass the fee on to you at closing.
One example of a site that charges you the Computerized Loan Origination fee with your California mortgage is Lending Tree. If you look at the licenses & disclosure statement found on Lending Tree’s website you’ll find that Lending Tree receives as much as $1,300 for selling your information. The bad news is that the lender passes this fee on to you. If you refinance your California home loan with one of the lenders in Lending Tree’s “network,” the Computerized Loan Origination fee will appear on your Good Faith Estimate and you’ll be required to pay it at closing.
You can learn more about refinancing your California mortgage without overpaying with our free mortgage tutorial.
,Wholesale Mortgage Rates
April 27th, 2007
If you are considering refinancing your California mortgage loan and would rather deal with a wholesale mortgage lender instead of your bank, you will need to enlist the help of a mortgage broker. Before choosing a mortgage broker you should negotiate with potential brokers and find one that agrees not to charge you Yield Spread Premium. Here are several tips to help you secure wholesale mortgage rates when refinancing your California mortgage.
Yield Spread Premium is the retail markup of your mortgage interest rate for a commission. When you refinance with a mortgage broker the wholesale lender behind your loan qualifies you for a specific wholesale mortgage interest rate. Your broker marks your mortgage rate up because the wholesale lender pays them a bonus for every quarter percent you agree to overpay above the rate you qualified. This problem of Yield Spread Premium is magnified by the high cost of real estate in California.
Homeowners typically do not have access to wholesale lenders in California; however, once you find a mortgage broker that agrees not to charge you Yield Spread Premium you will have access to wholesale mortgage rates. Tell your potential mortgage brokers that you understand Yield Spread Premium and will not accept a mortgage that includes this markup. Let them know you will pay a reasonable fee for the origination and all necessary closing costs; however, you will not tolerate retail markup of your mortgage rate. If possible try and deal with the owner of firm you are dealing with when negotiating and make sure the mortgage broker is licensed in the State of California. You can learn more about refinancing with a wholesale lender in California, including costly pitfalls to avoid with our free mortgage tutorial.
Existing Home Sales Drop At Fastest Rate In 18 Years
April 26th, 2007
The two most closely watched monthly housing reports came out this week and served only to muddy the real estate waters even further.
On Tuesday the National Association of Realtors issued its report on existing home sales for the month of March. It wasn't pretty. NAR spokesman, Chief Economist David Lereah placed most of the blame on...
Refinance Home Mortgage Loan
April 26th, 2007
Mortgage loans can be very confusing and there is an abundance of bad advice available on the Internet. Much of the mortgage information you find online is sales motivated and if you’re not careful you could wind up paying thousands of dollars unnecessarily. This is why doing your homework and carefully researching mortgage offers is important before applying for a new loan.
Doing your homework means more than simply comparing loan offers and choosing the loan with the lowest mortgage rate. You’ll need to negotiate with the mortgage companies you request quotes from to avoid paying Yield Spread Premium. This markup will cost you thousands of dollars in unnecessary mortgage interest each year if you accept a loan that includes this markup.
What is Yield Spread Premium? This is the markup your loan representative adds to your interest rate to boost their commission, often without telling you. Here is an example of how Yield Spread Premium works: suppose you are refinancing with a $300,000 loan using a mortgage broker. Your broker tells you that you qualify for a 6.5% mortgage rate and charges you 1.0% for the loan origination fees. What your mortgage broker isn’t telling you is that the lender approved you for 6.0% mortgage rate and they marked it up to receive a 2.0% bonus from that lender. The difference between the 6.0% mortgage rate you qualified and the 6.5% rate that you closed is Yield Spread Premium.
Once you understand how Yield Spread Premium works you can negotiate to avoid paying it. Tell your potential mortgage brokers that you will not accept this markup with your loan. Tell them you will pay a reasonable origination fee and all necessary closing costs; however, will not pay any amount of Yield Spread Premium. You can learn more about refinancing your mortgage without paying too much with our free mortgage video tutorial.
, ,Mortgage Rates Drop Along With Inflation Fears
April 25th, 2007
Soothing news about inflation was reflected by declining mortgage interest rates last week, although Freddie Mac and the Mortgage Bankers Association were in substantial disagreement about the scale of the changes.
Frank Nothaft, Freddie Mac vice president and chief economist said, "Mortgage rates slipped following the latest reports of..."
Benefits of Mortgage Refinancing
April 25th, 2007
Refinancing your home mortgage gives you the opportunity to get cash and lower your monthly payment. For many people their homes are the single largest asset they own; this also makes the mortgage payment the largest expense for their budgets. There are several ways to lower your monthly payment and put cash in your pocket even if you cannot qualify for a lower interest rate.
Cash back refinancing allows you to take advantage of the equity you have built in your home. For many homeowners refinancing with cash back is a more affordable option than a second mortgage or home equity line of credit. Refinancing with cash back allows you to qualify for a lower mortgage rate because your home is secured by only one loan.
If your financial situation has changed since purchasing your home you may qualify for a better mortgage rate. Many homeowners find being promoted, taking a new job, getting married or divorced changes their qualifying ratios and improves the mortgage rate they receive. Even if your credit prevents you from qualifying for a lower mortgage rate you can still lower your payment amount by extending the term length of your loan. Term length is the amount of time you have to repay the mortgage; the most common term lengths are 15 or 30 years. There are now 40 and 50 year terms to allow the greatest amount of flexibility when refinancing with cash back.
The cash you receive from refinancing can be used for any reason; many homeowners use this money to consolidate higher interest debt. The advantage of using the money for this reason is that you gain a tax deduction for consolidating your bills. Other common uses include home repairs and renovations and education expenses. You can learn more about refinancing your mortgage while avoiding costly mistakes with our free mortgage tutorial.
,Banking and Housing Giants Testify About Subprime Solutions
April 24th, 2007
The chief executives of both Freddie Mac and Fannie Mae as well as the Chairman of the Federal Deposit Insurance Corporation and the Federal Housing Commissioner and Assistant Secretary of the Department of Housing and Urban Development testified last week in a hearing before the U.S. House Committee on Financial Services about solutions to the current .
Each of the four had some interesting things to say about what their organizations/agencies are doing or could be doing to resolve the situation and...
Home Mortgage Refinance Loan Comparison Shopping
April 21st, 2007
If you’re shopping for a new home mortgage loan, the interest rate you receive is important because it helps determine your monthly payment amount. There are a number of other factors to consider when choosing a home mortgage refinance loan; here are several tips to help ensure you get a good deal and a good mortgage rate.
Comparison shopping for a low mortgage rate will not guarantee you a good loan. At best you’ll end up with the best of the worst mortgage offers available. At worst you’ll overpay thousands of dollars every year you keep the loan. The reason for this is that nearly every mortgage quote you receive when comparison shopping includes the hidden markup known as Yield Spread Premium. If you’re not familiar with this term you’re paying too much for the mortgage you have now.
What is Yield Spread Premium? When you qualify for a the wholesale lender behind your mortgage approves you for a certain interest rate. You mortgage representative knows this interest rate; however, they mark it up because the lender pays them a commission for overcharging you. That’s right, for every .25% that you overpay your loan representative receives a bonus of 1.0% of your mortgage amount. This bonus is in addition to the fees you are already paying for their part in arranging your new home mortgage loan.
Homeowners who unknowingly accept a mortgage that includes this markup pay thousands of dollars every year unnecessarily. You can avoid Yield Spread Premium with your home mortgage refinance loan if you’re upfront with the loan representative while comparison shopping. Tell your mortgage representative that you will not tolerate Yield Spread Premium, that you’ll pay a reasonable origination fee and any necessary third party settlement fees. Once you find a mortgage company that agrees to these terms, and any honest company would, you are in a position to choose the best mortgage for your financial situation. You can learn more about shopping for the best home mortgage refinance loan while avoiding costly mistakes like Yield Spread Premium with our free mortgage video tutorial.
The right of the federal banking oversight system to preempt any attempts by the various states' to regulate federally chartered financial systems has been discussed several times in these pages over the last month. That discussion centered on a nationwide system to allow the states to more efficiently and agents.